Gasoline Self-Reliance

He highlighted Iran's self-sufficiency in gasoline production, saying: "We can realize our preplanned objectives. Soon, our planned self-sufficiency in gasoline supply will come true and we will witness a big step ahead in the country's progress."

He said that big steps needed to be taken in all sectors.

"In the transport sector we are mulling renovation and we will do so. In communications with the world, we will have Iran recognized as North-South and East-West corridor. Furthermore, we will bring into operation our largest ports," he added.

Rouhani also underlined the need for progress in all sectors including water, environment, electricity, urban and rural development, gas supply, electricity supply, water supply, as well as technological knowhow.

"We seek development, but sustainable development is a priority of the 11th administration in favor of industrial progress for all Iran," he said.

Rouhani also said that the issue of environment was another priority in his administration.

11 South Pars Development Phases

Zangeneh described April 16 as a historic, unique and unforgettable day in Iran, saying: "This is the biggest group of projects financed by this amount of investment throughout history of petroleum industry."

He said that the 11th administration had a tough road ahead in implementing its development projects.

"The height of anti-Iran sanctions covered two and a half years of the tenure of the 11th administration. Therefore, we were not facing a smooth road towards development," he added.

"Under such circumstances, 11 phases came online under the 11th administration and the gas production and refining capacity in South Pars has increased from 240 mcm/d in mid-1392 (September 2013) to 570 mcm/d now. A total of 21 phases of South Pars are producing gas," the minister said.

"It is easy to speak about a megaproject, but finalizing a megaproject is very difficult, because all sections of a megaproject need to be tested," he added.

Zangeneh said Iranian contractors involved in South Pars had been empowered.

"Petropars, (Oil Industries Engineering and Construction Company) OIEC as oil contractor, Iranian Offshore Engineering and Construction Company, a qualified pipelaying fleet, a qualified offshore drilling fleet, increased capacity of rotary machine and gas network compressors are among other achievements of Ministry of Petroleum in Assaluyeh," he said.

Iran Development Jump

Zangeneh said all facilities and refineries that were inaugurated had been operated fully by Iranian engineers.

"The problem with the productivity of these projects is that costs are more than normal. This issue must be also fixed," he said.

Zangeneh said he had been involved in the South Pars projects since 1997, adding that all these projects in the South Pars zone had been built over 19 years.

He said these projects had potential to experience a development jump now that Iran's nuclear deal with six world powers-the Joint Comprehensive Plan of Action (JCPOA)-had been implemented.

Noting that the JCPOA was not merely an agreement, the minister said: "The JCPOA is a turning point in the history of social and political development in Iran and I offer my sincere gratitude to Dr Rouhani for policymaking and Dr Zarif as the executor of this policymaking within the framework of the JCPOA. I thank them for having taken us out of the bottleneck of sanctions and created the chance for development in Iran."

"In order to reach this objective (jump in development), instead of losing chances and spreading hatred we have to get united and in a friendly way reconstruct Iran," he said.

Bright Future

The Iranian minister of petroleum said development of South Pars gas field and reaching a balanced point in recovery from this

jointly owned field was a source of pride for the Iranian petroleum ministry.

"The Ministry of Petroleum has clear plans for the future," he said.

Zangeneh referred to the newly developed oil contractual frameworks, saying: "For the future of oil and gas the issue of oil contracts must be pursued. Fortunately, we have reached a national consensus on this issue. These contractors could create up to 100,000 active jobs just as Assaluyeh became the source of honor and dignity for Iran and Iranians."

The minister said the new oil contracts, known as IPC, would help launch hundreds of factories and manufacturing units.

"Furthermore, these contracts can help complete recovery from joint fields and prevent any waste of the Iranian nation's oil to be trapped underground and become unrecoverable," he added.

"By relying on feedstock produced in the country, Iran can become the top petrochemical power in the region," said Zangeneh.

 

$190b Revenue in South Pars

 

Ali Kardor, CEO of National Iranian Oil Company (NIOC) said at the ceremony that Iran had so far extracted 1,060 bcm of gas from South Pars while Qatar, which shares the field with Iran, had brought its total production to 1,771 bcm.

He said that Iran's revenue from South Pars totaled $191 billion, adding: "With the inauguration of development projects today and the continuation of this path we hope to be able to narrow the distance between Iran and Qatar."

Kardor referred to the drilling of wells by Qatar in border areas, saying: "Due to the well depletion area, nothing will happen to gas migration. In case we have good pace, we will be able to regain our share from this field."

He said that Iran's gas production at South Pars hit a record in 2016 with an output of 155 bcm.

 

$71bn Investment

 

Kardor said $71 billion had been invested in the offshore and onshore sections of South Pars (except for pipelines), adding: "Of this amount of investment, $19bn has been provided from domestic sources and $52bn from other sources like National Development Fund of Iran, banks, bonds, etc."

"The investment made in this sector will return shortly ; therefore, even if we have got any loans the return of investment will be possible shortly provided that the necessary economic models are provided," he added.

Kardor said upcoming projects in South Pars would be handled at more than 70% by domestic manpower.

 

South Pars Oil Layer Launched

 

With the inauguration of the six development phases of South Pars, sour gas production from this supergiant reservoir will increase by 170 mcm/d, while another 150 mcm/d of sweet gas will be injected to the national trunkline.

President Rouhani also launched production from the oil layer of South Pars. Tentative production from this oil layer had started in March and it has now reached 25,000 b/d, which is forecast to reach 35,000 b/d soon.

Furthermore, a floating production, offloading and storage (FPSO) unit was launched. The reason for using an FPSO is that construction of a refinery to process 35,000 b/d of oil is not economical. Furthermore, the crude oil extracted from the oil layer of South Pars is heavy.

Mohsen Paknejad, deputy managing director of NIOC for production, said extraction from the oil layer of South Pars was a dream that has come true now.

"In the first section which includes construction, installation and operation of wellhead platform, superstructures and substructures; each structure weighs 2,200 tonnes," he said.

"The second section includes drilling seven horizontal wells, three of which have two shafts and four are single-shaft," he added. "For the first time, we are witnessing single-shaft horizontal drilling in the oil layer of South Pars at a depth of 3,500 meters."

"Moreover, for the first time in the Middle East, designing, building and operating a processing vessel has been done with a capacity of 35,000 b/d," he said.

Paknejad said the structures used in the FPOS weighed 10,000 tonnes in total, adding: "If the FSPO weight is included, 25,000 tonnes of structure have been used."

 

Export from Oil Layer

 

Paknejad said the crude oil storage capacity of the FPSO stood at 700,000 barrels. "Over last month that the trial run of the oil layer of South Pars has begun, some 550,000 barrels of crude oil have been prepared to be exported from this layer," he added.

The oil layer of South Pars is mainly composed of carbonated reservoirs. It is estimated to hold between 1.5 billion and 4 billion barrels of oil in three formations. The API gravity of oil contained in this layer is estimated at 21 degrees.

The second phase of development of the oil layer will be awarded under an IPC contract. Iran is already in talks with foreign companies for the development of this layer.

Gholam-Reza Manouchehri, deputy managing director of NIOC for development and engineering, said: "It is predicted that we need $5 billion of investment for the second phase development of this project."

He said that the heavy crude oil contained in the oil layer required sophisticated technology for extraction.

"At present we don't have horizontal drilling technology for thin oil layers and we are also mulling recovering 100,000 to 145,000 b/d of oil from the oil layer of south Pars. Therefore, we need very new technologies to develop the oil layers," said Manouchehri.

He also said that development of the oil layer of South Pars was a 20-year project that needed regular drilling of wells.

Recovery from South Pars Oil Layer

Oil recovery from the oil layers of South Pars gas field, which is jointly owned by Iran and Qatar, was high on the agenda of the administration of President Hassan Rouhani as soon as he took office in 2013. Production from the oil layer recently started at a ceremony attended by President Rouhani. This is the first time that Iran is extracting oil through floating production storage and offloading (FPSO) unit. Normally, recovery from an oil layer starts at the rate of 5,000 b/d before reaching 35,000 b/d in five to seven days.

As soon as the capacity of FPSO reaches a certain level, oil tanker will dock to load oil cargoes. After that, Iranian people's longtime dream of South Pars oil recovery and export will come true after three decades.

Homegrown Oil Structures

Many officials have been saying that construction of platforms and oil structures has been indigenized. Iranian contractors have been installing the most sophisticated platforms in oil and gas facilities.

Bijan Zangeneh Iran's petroleum minister has recently heaped praise on domestic companies like "Iranian Offshore Engineering and Construction Company" (IOEC) for their significant contribution to installation of platforms in South Pars gas field.

In the 1990s, Iranian companies were able only to build jackets weighing up to 500 tones. But under the current circumstances, inspection, engineering, purchase, construction, equipment installation, loading, carriage, offshore installation, steering operations and maintenance of offshore oil and gas platforms have been nationalized ,and Iran is now able to build and install platforms weighing up to 5,000 tones. Years of sanctions and absence of foreign companies empowered Iranian contractors and provided the country's oil sector with a chance to carry out offshore pipe-laying, procure commodities, do coating and handle basic and detained engineering. That is why the processing platform superstructure of the oil layer of South Pars was installed on time. This superstructure was installed on a 1,300-tonne substructure in the oil layer. The substructure is 79 meters high and measures 28 meters in length and 26 meters in width. The superstructure, weighs 890 tones, measures 32 meters wide, 35 meters long and 20 meters high. It has a gathering and processing capacity of 35,000 b/d of oil. The platform has been fully designed, built and installed by Iranian engineers. Petroiran Development Company (PEDEC) and SAFF Offshore Industries Company have been the two Iranian companies involved in the installation of the superstructure. Sadaf 3000 floating sheerleg helped install the processing platform.

Development of the oil layer of South Pars was largely dependent on our access to FPSO. These vessels which are the best remedy for difficult projects play a very significant role in the oil industry and have been taken into consideration in recent years. Thanks to their production, storage and offloading capacities, they are specifically used in areas without sufficient infrastructure for oil and natural gas production.

An FPSO vessel is designed to receive hydrocarbons produced by itself or from nearby platforms or subsea template, process them, and store oil until it can be offloaded onto a tanker or, less frequently, transported through a pipeline. FPSOs are preferred in frontier offshore regions as they are easy to install, and do not require a local pipeline infrastructure to export oil. FPSOs can be a conversion of an oil tanker or can be a vessel built especially for the application. A vessel used only to store oil (without processing it) is referred to as a floating storage and offloading (FSO) vessel.

Oil has been produced from offshore locations since the late 1940s. Originally, all oil platforms sat on the seabed, but as exploration moved to deeper waters and more distant locations in the 1970s, floating production systems came to be used.

The first oil FPSO was the Shell Castellon, built in Spain in 1977. Today, over 270 vessels are deployed worldwide as oil FPSOs.

Floating production, storage and offloading vessels are particularly effective in remote or deep water locations, where seabed pipelines are not cost effective. FPSOs eliminate the need to lay expensive long-distance pipelines from the processing facility to an onshore terminal. This can provide an economically attractive solution for smaller oil fields, which can be exhausted in a few years and do not justify the expenditure of installing a pipeline. Furthermore, once the field is depleted, the FPSO can be moved to a new location.

Iran decided many years ago to develop the oil layer of South Pars in a bid to outdo Qatar. To that end, Iran made efforts to have FSPO, but due to tough sanctions it was impossible.

Two years have passed since the oil layer of South Pars became ready for operation. This project has recently come on-stream. It was a landmark event to see oil flowing from the world's largest gas reservoir. Compared with Qatar, Iran has been slow in developing its sector of South Pars, but Iran's accelerated efforts, doped with FPSO, could set a precedent.

The oil layer of South Pars is estimated to contain more than 14 billion barrels of oil in place. Oil recovery from this layer became possible after a production platform was installed to extract oil from seven wells. Three more wells are planned to be spudded.

The start of oil recovery from South Pars is important from a variety of aspects, but the most important one is the start of competition in oil production with Qatar by applying the state-of-the-art technology.

A buyback service contract was signed with PEDEC in 2004 for this project. The project for the development of the South Pars oil layer was among few projects undertaken directly by National Iranian Oil Company (NIOC). Operated by Pars Oil and Gas Company (POGC), the project was initially expected to come on-stream in 19 months, but the project was delayed for a variety of reasons.

The contract with POGC was terminated and an independent organization, South Pars Oil Layer (SPOL) was established in 2014 under direct authority of NIOC's managing director. SPOL managed to bring the project into operation.

The oil held in this three-formation layer has an API gravity of 21.

South Pars 17&18, 19, 20&21

As the administration of President Hassan Rouhani approaches the end of its term in office, promises of development of South Pars gas field are coming true one after another.

Phases 17&18, 19 and 20&21 have finally become operational, adding more than 150 mcm/d to the country's gas production capacity.

SP 17&18

Date of Signature of Contract: 2006

Date of Operation: 2016

Production Goals:

56.6 mcm/d of sour gas

75,000 b/d of gas condensate

2,740 tons a day of LPG

2,740 tons a day of ethane

400 tons a day of sulfur

Offshore Installations:

4 offshore platforms, 44 wells (105 kilometers off Assaluyeh), two 105-kilometer offshore pipelines, two 105-kilometer glycol transmission pipelines

Onshore Installations:

Treatment facility, four condensate storage tanks, LPG storage tanks

Contractors:

Iran's Industrial and Renovation Organization (IDRO)

Iranian Offshore Engineering and Construction Company (IOEC)

National Iranian Drilling Company (NIDC)

Oil Industries Engineering and Construction Company (OIEC)

Dana Energy Company

Iran Shipbuilding & Offshore Industries Complex Co (ISOICO)

ore Information:

Phases 17&18 of South Pars have generated more than $2.35 billion in revenue since 2014. That is equal 47 tons of gold.

For each phase, 80 kilometers of cable has been installed. That is equal the distance between the cities of Tehran and Qazvin.

The daily production from these phases equals two billion household gas cylinders.

More than 8,000 people per day have been involved in the operation of this phase from beginning to end.

South Pars phase 19

Date of Signature of Contract: 2010

Date of Operation: 2016

Production Goals:

56.6 mcm/d of sour gas

75,000 b/d of gas condensate

2,740 tons a day of LPG

2,740 tons a day of ethane

400 tons a day of sulfur

Offshore Installations:

4 offshore platforms, 21 wells (90 kilometers off Kangan), two 90-kilometer offshore pipelines, two 90-kilometer glycol transmission pipelines

Onshore Installations:

Treatment facility, four condensate storage tanks, LPG storage tanks

Contractors:

Petropars

Iranian Offshore Engineering and Construction Company (IOEC)

Oil Industries Engineering and Construction Company (OIEC)

More Information:

Phase 19 of South Pars has generated more than $800 million in revenue since March 2016. That is equal 25 tons of gold.

For each phase, 80 kilometers of cable has been installed. That is equal the distance between the cities of Tehran and Qazvin.

The daily production from these phases equals two billion household gas cylinders.

More than 11,000 people per day have been involved in the operation of this phase from beginning to end.

Five million tons of earth removal, five million tons of earth pouring

South Pars phases 19&20

Date of Signature of Contract: 2010

Date of Operation: 2016

Production Goals:

56.6 mcm/d of sour gas

75,000 b/d of gas condensate

2,740 tons a day of LPG

2,740 tons a day of ethane

400 tons a day of sulfur

Offshore Installations:

2 offshore platforms, 22 wells (105 kilometers off Assaluyeh), two 105-kilometer offshore pipelines for gas transmission, two 105-kilometer glycol transmission pipelines

Onshore Installations:

Treatment facility, four condensate storage tanks, LPG storage tanks

Contractors:

Iranian Offshore Engineering and Construction Company (IOEC)

Oil Industries Engineering and Construction Company (OIEC)

More Information:

Phases 20&21 of South Pars have generated more than $200 million in revenue since March 2016. That is equal 5 tons of gold.

For each phase, 80 kilometers of cable has been installed. That is equal to the distance between the cities of Tehran and Qazvin.

The daily production from these phases equals two billion household gas cylinders.

More than 10,000 people per day have been involved in the operation of this phase from beginning to end.

Petchem Output Up 2mn Tonnes

Iranian President Hassan Rouhani has inaugurated four petrochemical projects that would add some two million tonnes to the country's petrochemical production capacity. The projects are Phase II of Kavian Petrochemical Plant, Takht-e Jamshid Petrochemical Plant, Entekhab Styrene Petrochemical Plant and Morvarid MEG Petrochemical Plant in Assaluyeh.

Addressing the ceremony to launch the projects, President Rouhani said under his administration plenty of activities had been done for more exports.

"For the first time in Iran's history, non-oil exports outdid imports in the [calendar] years 1394 and 1395 (March 2015 to March 2017)," he said.

"Although oil prices were low and the 11th administration was under economic pressure, over $40 billion [gained] from oil revenue will be deposited into the National Development Fund of Iran before the 11th administration bows out [next August]," he added.

Like oil, petrochemical industry has based its activities on exports, he said, adding: "Now the preparations have been made for a jump in the petrochemical industry."

Rouhani said national development must take into consideration relative advantages.

"Petrochemical industry is a relative advantage in Iran and now good steps have been taken in this industry," said the president.

Rouhani highlighted the extent of petrochemical industry in southern Iran due to access to water, electricity and sufficient feedstock, saying all these facilities would set the stage for a big jump in the petrochemical sector.

Big Jump in Petchem Sector

President Rouhani said international sanctions imposed on Iran had blocked petrochemical exports.

"We had the problem of supplying feedstock and exporting products. Therefore, the lifting of sanctions on the petrochemical industry was one of the primary agreements reached in Geneva and today we have to get ready for a big jump after the removal of obstacles," he said.

Rouhani noted that the inauguration of the four petrochemical projects and preparations for new projects in coming weeks is an indication of Iran's readiness to move on the path of progress.

Trade Ties with Neighbors

The Iranian president also said that plans were under way to draft agreements with five Eurasian countries to establish a free trade zone.

"Furthermore, good capacity has been prepared for the development of agricultural and industrial products to northern [neighboring] countries," he said.

Rouhani said plans were being made for broadening ties with western neighbors like Iraq and Turkey.

"In this regard, our road and railway connection with the Black Sea and the Mediterranean is on the agenda. Meantime, we plan to transfer commodities needed by Russia from the Indian subcontinent to Moscow through the Bandar Abbas route and by railway," he added.

Rouhani said proper measures have been taken in northern and western Iran to take advantage of export potentialities for growth, development and job creation.

He said Iran was the 14th producer of electricity in the world, adding: "Under the 11th administration, the electricity generation capacity increased by 10% and today we are exporting electricity. We can also become the hub of the region in this sector."

Makran Development

President Rouhani said development of Makran coastal area was strategically important for Iran.

"In this project, it will be possible to export part of the country's oil via the Sea of Oman and it will reduce our dependence on the Strait of Hormuz," he added.

Rouhani went on to discuss the eastern parts of Iran and their potential in mining and transit.

"As oil is a source of power for Iran and we had been deprived of this source to a great extent before the JCPOA until our exports fell to below 1 mb/d, airplanes traffic in the sky of a country is another show of power. Under the 11th administration, aviation traffic increased by 93%," said the president.

Rouhani referred to the renovation of aviation and railway fleets, saying: "Five Iranian provinces will be connected to national railroads before the end of the mandate of the current administration, and our ports are under development. The east of our country will become North-South Corridor."

Iran, Top Regional Petchem Producer

Iran's Minister of Petroleum Bijan Zangeneh said at the same ceremony that completion of value chain in the oil sector was in line with the country's Resilient Economy plans.

"Petrochemical plants enjoy such potential and these four petrochemical projects will complete this chain," he said.

Zangeneh said that Kavian Petrochemical Plant with an ethylene output of two million tonnes would create a value chain as far away as Tabriz and Urmia in northwestern Iran.

"Therefore, ethylene would be produced in South Pars [gas field] to be carried by pipeline to Andimeshk, Lorestan, Ilam, Kermanshah, Sanandaj, Miandoab. Mahabad, Tabriz and Urmia," said the minister.

"Jask and Chabahar are two other zones which are prioritized for development due to their strategic importance and they will be activated soon," Zangeneh said.

He said that for the first time in the history of petroleum industry, petrochemical plants had become operational before gas production in Assaluyeh.

"When Mohammad-Reza Nematzadeh (present minister of industry, mine and trade) was CEO of National Petrochemical Company, nobody could believe that a large number of petrochemical plants would be built on 1,400 to 1,500 ha of land," he said. "But now due to the volume of construction we are facing land shortage for petrochemical development. For instance in Bandar Imam we have to seek a new place for development."

Sufficient Feedstock Supply

Iran's minister of petroleum said that sufficient feedstock had been prepared for petrochemical units in the country.

"We will be producing approximately 13.5 million tones of ethane from the 27 phases of South Pars. Meanwhile, different NGL units have been privatized and they have reliable, low-cost and competitive feedstock," said Zangeneh.

He said that for the first time in the history of petroleum, the issue of supply of feedstock to petrochemical plants became very important at the ministry.

"Until recently, the byproducts of oil and gas refineries were used for petrochemical units while the Ministry of Petroleum in the 11th administration focused on the supply of feedstock to petrochemical plants," he added.

Zangeneh said $40 billion investment could increase revenue from petrochemical sales by $20 billion to $21 billion.

"Iran could have the top rank in the region in terms of petrochemical production," he added. Zangeneh said petrochemical products supplied in Iran were valued at $15 billion, adding: "$6 billion worth of these products is consumed in Iran for value chain and the remaining $9 billion is exported to the world markets."

The minister said that efforts must be undertaken for increasing the value-added of petrochemical products, which require stability and foresight.

"Stability depends on policies, behaviors, slogans and strategies. There is no doubt that Iran could afford it," he added.

Modern Petchem Plants

Zangeneh said that it was vital for Iran to establish technologically modern units that would convert natural gas to plastics or raw materials for plastics.

"Under the current administration huge efforts were undertaken for progress in these units, but there are problems with regard to financing. It seems that launching six to seven units could boost the economy in underprivileged areas of the country," he added.

Zangeneh said private investors were being encouraged to invest in the petrochemical industry.

"Given serious competition between applicants for feedstock, we have to pay special attention to the private sector," he added.

Zangeneh said Kaveh methanol project was the largest methanol unit in the world to come online soon with a capacity of 2.5 million tonnes. He added that Phase III of Pardis Petrochemical Plant with a production capacity of 1.5 million tonnes of urea and ammoniac would also come online in the near future.

He said the current year and upcoming calendar years would be golden years for Iran's petrochemical industry.

7 Petchem Projects Due to Come Online

Marzieh Shahdaei, CEO of National Petrochemical Company (NPC) said a major advantage with Iran's petrochemical industry was to avoid selling raw materials.

"Currently 30 petrochemical plants are supplying products in Pars Special Economic Energy Zone," she added.

Shahdaei, who is also a deputy minister of petroleum, said maximum use of gas was a priority for the petrochemical industry after the inauguration of South Pars development phases.

"New projects will be planned with a view to completing the value chain," she said.

Shahdaei said Iran was among few countries with access to petrochemical feedstock. "On this basis, implementation of petrochemical industry projects in the future will be the standard-bearer of foreign investment and transfer of technology into the country," she added.

She said 52 petrochemical production plants were in operation, adding that the rated capacity of these plants stood at 60 million tonnes a year.

Shahdaei said petrochemical plants in Iran brought their output to 51 million tonnes last calendar year.

She said that Iran was earning $15 billion from selling 28 million tonnes of petrochemicals on domestic and foreign markets.

"With the inauguration of these four petrochemical projects, two million tonnes will be added to the country's petrochemical production capacity. Meantime, $883 million has been invested in these projects," said Shahdaei.

 

"New projects will be planned with a view to completing the value chain," she said.

Shahdaei said Iran was among few countries with access to petrochemical feedstock. "On this basis, implementation of petrochemical industry projects in the future will be the standard-bearer of foreign investment and transfer of technology into the country," she added.

She said 52 petrochemical production plants were in operation, adding that the rated capacity of these plants stood at 60 million tonnes a year.

Shahdaei said petrochemical plants in Iran brought their output to 51 million tonnes last calendar year.

She said that Iran was earning $15 billion from selling 28 million tonnes of petrochemicals on domestic and foreign markets.

"With the inauguration of these four petrochemical projects, two million tonnes will be added to the country's petrochemical production capacity. Meantime, $883 million has been invested in these projects," said Shahdaei.

Petchem Output Up 5mn Tonnes in 4 Years

Shahdaei said 13 petrochemical projects had come online over the past four years, adding 5.2 million tonnes to the country's petrochemical output capacity.

She said seven projects were to come online this calendar year and 10 others next calendar year.

She added that the country would see its petrochemical production capacity increase some 20 million tonnes by March 2019.

Pardis Petrochemical Plant is due to come online soon, followed by Marjan Petrochemical Plant and Phase I of Bushehr Petrochemical Plant later this year.

25 New Projects Envisaged

Shahdaei said 25 new projects are envisaged under Iran's petrochemical development roadmap enshrined in the country's 6th Five-Year Economic Development Plan. These new projects would be fed mainly on domestically produced feedstock and natural gas.

She said that the Iranian Ministry of Petroleum had assigned five upstream projects to NPC, adding: "In total, there are 30 petrochemical projects whose development would need $40 billion in investment. Furthermore, $15 billon is needed for completing remaining projects."

Regarding zones envisaged for petrochemical projects, Shahdaei said Mahshahr, Lavan, Kish, Qeshm, Bushehr, Jask and Chabahar were prioritized due to their proximity to the Sea of Oman and the Persian Gulf.

Takht-e Jamshid Pars Petrochemical Plant

Takht-e Jamshid Pars petrochemical plant was established to produce 55,000 tonnes a year of polystyrene. This project has been financed by €40 million plus IRR 1,350 billion from equities. The plant is estimated to sell around $85 million of products a year. Pars petrochemical plant will supply 50,000 tonnes a year of feedstock to this project.

Phase II of Kavian Petrochemical Plant

Kavian petrochemical plant is the largest olefin unit in the Middle East. Phase II of this plant would double the plant's output to deliver two million tonnes a year of ethylene to polymer units located on the route of the West Ethylene Pipeline. This project is financed by €200 million provided by National Development Fund of Iran (NDFI) and IRR 2,350 billion from equities. Annual sales are estimated to reach $950 million in Phase II which will be fed by 1.3 million tonnes a year of ethane from the development phases of South Pars gas field.

Morvarid MEG Plant

The second phase of Morvarid petrochemical plant is designed to produce monoethylene, diethylene and triethylene to create value. The feedstock for this plant comes from the olefin unit of Morvardi Petrochemical Plant (340,000 tonnes of ethylene a year) as well as 368,000 tonnes a year of oxygen to produce 554,000 tonnes a year of ethylene glycol. This project is funded by €170 million of foreign financing plus IRR 8,900 billion from equities. It is estimated to generate $630 million in annual revenue.

Entekhab Polystyrene

The polystyrene unit of Entekhab Industrial Group has been designed and launched with a production capacity of 25,000 tonnes of polystyrene. This project has been financed by $120 million plus IRR 2,000 billion from equities. It is estimated to yield $385 million from annual sales. Pars Petrochemical Plant will feed the project with 235,000 tonnes a year of styrene.

 

Post-JCPOA Petchem Achievements in Iran

Iran's petrochemical sector has definitely been a beneficiary of the country's 2015 landmark nuclear deal with six world powers, known as the Joint Comprehensive Plan of Action (JCPOA). Among achievements in this sector are increased production, many rounds of talks with top international companies and their show of interest for investment in Iran.

JCPOA has had mid and long-term effects on the petrochemical industry in Iran. The possibility for foreign companies to invest in Iran, transfer technical knowhow, supply of equipment, catalysts and chemicals directly to Iranian companies at lower costs and within shorter periods of time, possibility of renewed presence in Europe's markets, effective presence in the global trading of petrochemicals and subsequently increased revenue from exports, facilitation of transport conditions and insurance cover for Iran's petrochemical products in world markets, and acceleration of development projects due to sufficient financing, equipment supply and availability of technological savvy are among these effects.

Furthermore, implementation of infrastructure projects with Iran's unfrozen money through reliance on domestic capabilities, reduction in the cost price of petrochemicals, higher profitability, access to technical savvy, particularly MTP (methanol-to-propylene conversion) and the possibility of commercialization of newly developed technical knowhow in cooperation with top international companies were achieved following the implementation of the JCPOA early last year.

The JCPOA effects are not limited to the aforementioned points. Some other effects are as follows: getting access to updated data about market and basic, middle and final products, improvement in the arrangement of letters of credit, easier financial transactions and transfer of money in exchange for exporting petrochemicals (reduced costs thanks to SWIFT), completion and implementation of petrochemical industry projects through benefiting from unfrozen assets, financing, joint venture and foreign direct investment, enhancing the output in production units to the rated capacity, strengthening the structure of investment management to facilitate the process of investment in petrochemical projects, more transparency in policies related to petrochemical industry including feedstock pricing, further coordination in petrochemical exports in collaboration with top petrochemical holdings in the country with a view to growing presence in regional and global markets, and drawing up new policies in order to establish strong commercial ties with European countries.

Among the most important activities of Iran's National Petrochemical Company (NPC) following the entry into force of the JCPOA are management of the petrochemical industry's international interactions, undertaking efforts to facilitate financing, supply of technical knowhow and equipment needed for the development of petrochemical industry. In this regard, specialized meetings have been regularly held, international seminars and exhibitions have been organized to invite leading international companies.

Another field of activity by NPC after the removal of sanctions has been the management of domestic interaction between petrochemical companies in Iran with a view to laying the groundwork for active presence under new circumstances and arranging further coordination between petrochemical companies and upstream feedstock suppliers in a bid to make maximum benefit from installed capacities and subsequently enhance the productivity and competitiveness of Iranian petrochemical companies in regional and global markets.

Another measure taken by the NPC to take maximum benefit from the post-JCPOA conditions has been its efforts to facilitate domestic and foreign investment with focus on foreign direct investment and making planning in order to provide necessary infrastructure in new petrochemical hubs.

Negotiations with Foreign Firms

Since petrochemical industry is capital-intensive and knowledge-based and owes its survival to revenue from exports and international interactions, the NPC has severely concentrated on financing, acquisition of technical knowhow and supply of equipment needed for the development of petrochemical industry through cooperation with leading international companies. This approach has been focused on the quality development of petrochemical industry and strong presence in global markets. In all stages

, the company has focused on the transfer of technical knowhow and empowering the domestic sector through partnership between Iranian and foreign companies. This issue has been an important element in the Resilient Economy.

NPC has signed memorandums of understanding with leading petrochemical companies, and reached agreement with countries like China, Austria and Germany for cooperation. Some of them are as follows:

-MOU with France's Total to conduct studies for petrochemical projects in partnership with Iranian investors (currently Persian Gulf Petrochemical Industries Company);

-MOU with Germany's Linde to carry out air separation units within the framework of BOO or BOT deals in Iran and also transfer of technical savvy along with facilities provided by German banks for operating a petrochemical project in Iran in partnership with Iranian investors;

-MOU with France's BASF to conduct studies for joint venture deal with Iranian investors (currently Persian Gulf Petrochemical Industries Company) to build a major petrochemical plant in Iran;

-MOU with Japan's Mitsui to conduct studies on a centralized petrochemical utilities project in the second phase of Assaluyeh with the financing of Japan's JBIC bank;

-MOU with Sercobe to study method of cooperation and supply of equipment and technical knowhow needed in petrochemical industry through Spanish companies and manufacturers and financing by Spanish banks based on corporate guarantee;

-MOU with Japan's Sojitz to conduct feasibility studies on GTPP project in Iran;

-MOU with South Korea's Hyosung to conduct feasibility studies on PDH/PP project in Iran;

-MOU with Royal Dutch Shell to conduct feasibility studies and assess investment in Iran's petrochemical industry and benefit Shell's technical knowhow for petrochemical industry development (with GTL priority)

-Negotiations with Dz Bank, KFW Bank and Hermes FCA of Germany for insurance cover based on corporate guarantee and supplier's credit structure;

-MOU with Japan's JBIC and NEXI to provide credit for financing petrochemical projects in Iran based on corporate guarantee and supplier's credit structure;

-Negotiations with commercial attachés of the Danish and British embassies in Iran to invite banks and export credit agencies of Denmark and Britain to get familiar with petrochemical projects and create a financing structure without state guarantee;

-MOU with Japan's Marubeni to study a 320-million-euro usance contract based on the Persian Gulf Petrochemical Industries Company's Corporate Guarantee (the agreement was finalized and took effect);

-MOU with Japan's ITOCHU to examine a 320-million-euro (that could be raised to 640 million euros) usance based on the Persian Gulf Petrochemical Industries Company's Corporate Guarantee; and

-Negotiations with relevant authorities in Japan to follow up on the removal of obstacles to the release of a $10-billion credit line agreed upon by Iran's Ministry of Economy and Finance and Japan's Ministry of Economy, Trade and Industry.

Currently, sustainable and balanced development of petrochemical industry in line with the objectives set forth in the 2025 Vision Plan for the petrochemical sector focusing on the completion of value chain based on spatial studies, achieving the rated capacity of existing facilities, development of investment and creating new capacities for petrochemical products, increasing the value-added of hydrocarbon reserves by completing the value chain and incomplete projects, increasing the share of petrochemical industry in national economy and effective presence in global markets, development of technology and operation of domestic knowledge-based companies with a view to indigenizing modern technologies, market development, diversification of products and presence in domestic and international markets as well as preparing legal conditions for the allocation of financing needed for petrochemical projects are among major objectives of the NPC.

Petchem Exports at 25mn Tonnes

The head of National Petrochemical Company (NPC) has said foreign investors extensively attended Iran's 13th petrochemical forum (IPF) thanks to the removal of sanctions.

Marzieh Shahdaei said four memorandums of understanding had been signed with top petrochemical companies after Iran's nuclear deal with six world powers took effect in January 2016.

"Currently these companies are conducting economic and technical feasibility studies on the projects. They will be concluded this year and agreements will be signed," she said.

Shahdaei cited Royal Dutch Shell and France's Total as companies with which the NPC had signed memorandums. "The amount of investment by these companies will be determined after project assessment based on the rate of return on investment."

She said that the Iranian calendar years of 1395, 1396 and 1397 (from March 2016 to March 2019) are the golden years of petrochemical industry in Iran as new projects would come online.

Shahdaei said Iran's petrochemical exports would rise from 21 million tonnes in the last calendar year to March 2017 to 25 million tonnes in March 2018.

She highlighted a rally in oil prices over the past three months, saying: "That has caused petrochemical prices to increase and revenue from exports is also seeing a significant growth this year."

Shahdaei said that petrochemical industry was capital-intensive, adding: "Development of petrochemical industry will not happen with financing. Implementation of the JCPOA (nuclear agreement) and mutual trust between domestic and foreign companies cleared the way for the increased presence of international investors."

She expressed satisfaction with 20 speeches delivered by senior managers of international companies at the 13th IPF.

New Gas Supply Project Operational

A gas supply project has become operational in "Alamout" area in the northern Qazvin province. The area was connected to national gas network in the presence of President Hassan Rouhani.

The project was in line with the Rouhani administration's plan to supply gas to rural and urban areas.

President Rouhani enumerated measures undertaken by National Iranian Gas Company (NIGC) under his administration, saying: "Under the 11^th administration, 9,000 villages were supplied with gas while the number of villages that have received gas since the establishment of NIGC totals 14,000."

Rouhani said that laying pipelines in treacherous areas was a tough task. "We hope that with this gas supply, residents of this area would enjoy more welfare and less environmental pollution."

This project is implemented in two phases, including a 48-kilometer and a 25-kilometer pipeline.

Zangeneh: Talks with Total Continue

Iran's petroleum minister has announced the continuation of negotiations with France's Total for the development of Phase 11 of South Pars gas field.

"Negotiations with Total have never been halted. They continue and make progress," Bijan Zangeneh said on the sidelines of Iran Petrochemical Forum (IPF).

He also referred to the development of Azadegan oil field, saying: "The five or six foreign qualified companies will be invited to bid for the project. But first their technical and then financial and commercial proposals will be examined."

He said that memorandums were to be signed with some foreign companies to conduct studies on Azadegan. "Companies are drawing up their technical proposals," he added.

Asked by Iran Petroleum if any company other than Maersk was willing to develop the oil layer of South Pars, Zangeneh replied: "No other proposal has so far been submitted by other companies in this regard and we are currently in talks with Maersk."

The minister underlined the priority of holding tender bids for oil and gas fields, saying: "All jointly owned fields including the oil layer of South Pars and Azadegan, Yadavaran, Yaran, Siri A, Siri B, Changouleh and Azar fields were prioritized for development."

Regarding talks with Indians to develop Farzad B field, he said that the talks had been long drawn-out. "Iran will get nothing from the Indian side's proposal. Therefore, it was announced that in case they do not change gas prices our negotiations will practically end inconclusively."

"I don't say that negotiations between Iran and India for developing Farzad B has failed, but continuation of talks depend on the Indian side," he said.

Zangeneh said Russia's Gazprom was willing to study Farzad A and Farzad B fields.

"In parallel with negotiations with the Indians, we agreed with Gazprom's offer to study Farzad A and Farzad B and we will give them the data," he said.

"In parallel with all this, we plan to pick an upstream consultant and drill an exploration well, as part of our studies. In case our negotiations with two foreign companies fail to yield results, we will develop this field in a way other than conventional oil contracts," said Zangeneh.

The minister said the reason for such a decision was that Farzad was shared with a neighboring country, adding that its development was a priority.

Zangeneh was also asked about the possibility of extension of an OPEC deal to maintain production cuts in a bid to shore up prices in the second half of the year.

"The messages we are receiving from OPEC and non-OPEC are all positive," he said.

Zangeneh said OPEC and non-OPEC oil producers have been determined to be instrumental in the market management and supply of oil on the market.

He said Iran would support any unanimous decision by OPEC, adding: "Any improvement in the market would benefit both producers and consumers."

Linde Ready to Invest in Iran

An Iranian deputy minister of petroleum has said that Germany's Linde AG has voiced its readiness to invest in Iran's petrochemical projects.

"Linde is ready to cooperate with Iran in several petrochemical projects," Amir-Hossein Zamani-Nia said on the sidelines of IPF in Tehran.

He said ways of financing projects in Iran had been discussed with Linde, adding: "They believed that although European banks hesitate for presence in Iran, there are different ways of financing."

Zamani-Nia said Linde's directors had met with Iran's petroleum minister, Bijan Zangeneh, on the sidelines of the petrochemical forum. "This company has also shown inclination for presence in Iran LNG project."

He said comprehensive talks had been held with Linde, adding that this company was ready to invest in Iran with its own capital.

Zamani-Nia said Linde was willing to transfer technical knowhow to Iran, and was expected to finalize agreements with Iranian companies involved in the petrochemical industry.

He said that Linde's participation in the Damavand petrochemical project and several methanol projects was discussed between Shahdaei and Linde's delegates.

Both sides stressed the necessity of government support in both countries for the facilitation of talks.  

PRTC, Norway's Norner Strike Deal

Iran's Petrochemical Research and Technology Company (PRTC) has signed a heads of agreement with Norway's Norner for the development of propylene technology and associated catalysts.

The agreement was signed between Esmail Qanbari of PRTC and Norner's director of business development Lars H. Evenson on the sidelines of IPF in Tehran.

Qanbari said Iran's National Petrochemical Company (NPC) would focus on propylene over coming ten years as part of its plan to boost downstream industry.

He added that PRTC was mulling strategic cooperation with Norner in order to develop petrochemical industry.

Qanbari said that a semi-industrial polypropylene unit with a capacity of 2,400 tonnes a year was launched by PRTC in the central city of Arak last year.

"The polypropylene catalyst was manufactured domestically and tested successfully in Iran," he added.

Qanbari said the objectives behind this propylene unit included indigenization of associated technical savvy, development of products and improvement of processes, indigenization of special equipment, testing catalysts and additives, enhancing output and profitability, technological innovation and training manpower.

He said Iran's rated production capacity of propylene was 965,000 tonnes a year in 2013, adding that the output was planned to reach 4 million tonnes under the 6^th Five-Year Economic Development Plan and 9 million tonnes under the 7^th Development Plan.

  

 

   

 

 

Condensate Refinery Operational

Iran Becomes Self-Sufficient in Petrol Production

The first phase of Bandar Abbas Condensate Refinery, operated by the Persian Gulf Star Oil Company, came online in the presence of President Hassan Rouhani and Minister of Petroleum Bijan Zangeneh.

In this first phase, the facility would produce 12 ml/d of euro-4 gasoline, 4.5 ml/d of euro-4 diesel fuel, 1 ml/d of euro-4 kerosene and 1.3 ml/d of liquefied petroleum gas (LPG). That would end Iran's gasoline imports.

The refinery will be operated in three phases. Once fully operational, the refinery will be able to produce 36 ml/d of euro-4 and euro-5 gasoline. Currently, nine refineries in Iran are producing 65 ml/d of gasoline altogether.

Addressing the inauguration, the Iranian president said: "Launching this project and self-sufficiency in gasoline production are a source of honor in gas production."

"Under the 11th administration, we managed to become an exporter of gasoil and we will soon be exporting gasoil," he added.

Rouhani said the implementation of Iran's nuclear deal with six world powers "provided grounds which we should benefit from."

Iran Development Path Bright

Minister Zangeneh said after three years of consecutive activity, Iran can now celebrate the start of production of high-octane gasoline at the Bandar Abbas refinery.

"The path towards national development is bright," he said.

Zangeneh noted that the refinery would reach its full production capacity soon.

"Of the total $3.7 billion invested in this project, $1.4 bn was allocated by the 11th administration," he said.

Zangeneh said the refinery project was 47% complete in 2013 when Rouhani took office. "Now, three phases are 90% complete," he added.

The minister also highlighted efforts undertaken by the Khatam al-Anbia Construction Headquarters as the contractor in the project, saying: "We have used all our management experiences and capacities for implementing this project. This is while the current administration was under sanctions for two and a half years."

India to Receive Iran LPG

Iran has signed a first deal with India to supply the Asian energy-starved country with liquefied petroleum gas, the CEO of Iran Gas Commercial Company (IGCC) said.

Mohammad Ali Barati said the deal was signed in Tehran on the sidelines of 2^nd Argus LPG conference.

"Iran enjoys very good conditions for supplying oil, gas and petrochemical products on the world markets," he said.

Barati said the first Argus LPG conference received rapturous welcome last year thanks to the lifting of international sanctions.

"That prompted us to attend the second conference and make efforts to gain our share of the global trading of this product," he added.

"Such seminars are attended by all buyers, vendors, shipping firms, brokers, etc. the LPG market in the Far East and the Middle East are analyzed, and based on these analytic data, negotiations are held with different countries and agreements are reached," said Barati.

He said that IGCC was responsible for selling LPG produced at two phases of South Pars and total sulfur produced at Assaluyeh.

"Based on negotiations held in this regard, the total LPG produced at South Pars and Sarkoun, Qeshm and Fajr Jam refineries would be assigned to IGCC to be sold," said Barati.

New Oil Finds in Iran

Iran has seen its oil reserves increase with new discoveries, the CEO of Iran Fuel Conservation Organization (IFCO) said.

Ali Vakili referred to the discovery of "golden triangle of oil" in southern Iran, saying: "With the announcement of new discoveries, it would be possible to boost Iran's ranking among owners of oil reserves in the world."

Addressing the first international conference on enhanced oil recovery in Tehran, he said: "Iran is ranked the first in terms of gas deposits in the world and the country's oil and gas reserves combined have turned Iran into one of the most important countries in terms of global energy supply security."

Vakili said more than a century had passed since first oil well was drilled in Iran. "Many oil fields in Iran are in the second half of their lifecycle and we have to bring the production cycle back to an optimal status with a good output by applying EOR methods."

He said that $200 billion was needed to be invested for developing oil and gas reservoirs in Iran in coming years.

"EOR and IOR demand huge investment and attracting this amount of capital is a major challenge faced by Iran in enhanced recovery," said Vakili.

He said that Iran's Institute for International Energy Studies had drawn up a comprehensive energy plan for the country to estimate Iran's energy supply and demand for four decades.

South Azadegan Output at 80,000 b/d

South Azadegan oil field has seen its production cross 80,000 b/d after long years of remaining unchanged at 50,000 b/d, a top official at the Petroleum Engineering and Development Company (PEDEC) said.

Touraj Dehqani, manager of South Azadegan development, said the first phase of early production in the oil field had materialized.

"Early production from South Azadegan oil field is targeted at 110,000 b/d, which we hope will be realized" up to June, he said.

In October 2009, a contract was signed between National Iranian Oil Company (NIOC) and China's CNPCI for the development of South Azadegan. Due to changes in the master development plan (MDP), the project started in September 2012, but it failed and the NIOC cancelled the contract due to the Chinese party's time killing. Then, Iranian companies replaced the Chinese firm.

Now in less than three years, the domestic companies have brought the South Azadegan output to more than 80,000 b/d.

South Azadegan, which Iran shares with Iraq, is planned to produce 320,000 b/d in the first phase of development and 600,000 b/d in the second phase.

NIOC has so far signed memorandums of understanding with Japan's Inpex, Franc's Total, Royal Dutch Shell, Malaysia's Petronas and Iran's Tanco to study South Azadegan which is set to be put out to tender.

Dehqani expressed hope that development of South Azadegan under Iran's new model of oil contracts would help boost the rate of recovery from this giant field.

8mb/d Oil Export Record Set

Iran Oil Terminals Company (IOTC) managed to set a record of exporting 8 mb/d of crude oil in the last calendar year to March, the CEO of National Iranian Oil Company (NIOC) said.

Ali Kardor said that IOTC also managed to record the simultaneous berthing of eight oil tankers at Kharg oil terminal.

"Oil production and exports experienced a good growth in the calendar year 1395 and several stunning records were set for the petroleum industry in storage, berthing of oil tankers and export of crude oil and gas condensate. It was remarkable," he said.

Kardor referred to the renovation of jetties and crude oil storage and export facilities, saying: "In parallel with these activities, valuable job has been done with regard to smart pig running of subsea oil pipelines between Genaveh Port and Kharg Island, which will secure crude oil exports."

He said that Iran's economic growth owed largely to the NIOC performance, adding: "Therefore, we have to make more and more efforts to strengthen the standing of NIOC and its subsidiaries."

Iran Gas Output Up 170 mcm/d

Bijan Zangeneh, the Iranian minister of petroleum, says the inauguration of 11 development phases of South Pars gas field under the administration of President Hassan Rouhani indicated that Iran is a technically and industrially powerful country.

Zangeneh, who was addressing reporters during a ceremony to launch phases 17&18, 19, 20&21 of South Pars, also talked about Iran's gas export strategy, implementation of Iran Petroleum Contract (IPC), oil deal with Russia and future cooperation between OPEC and non-OPEC oil producers.

The minister said inauguration of eight oil and gas projects in Assaluyeh, valued at $20 billion, in a single day was "unprecedented in the history of Iran's petroleum industry".

He cited six phases of South Pars, saying: "By inauguration these phases, 170 mcm/d is added to the sour gas production capacity of South Pars gas field. Furthermore, in each phase, half a million tones of ethane and half a million tones of LPG as well as 35,000 to 40,000 barrels of gas condensate is produced."

Zangeneh said the six phases were valued at $18 billion, $10 billion of which had been invested years ago. The rest was earmarked after Rouhani took office.

He also referred to recovery from the oil layer of South Pars, saying: "Currently Iran is recovering 25,000 b/d of oil from this field."

Zangeneh said four petrochemical projects, including Phase II of Kavian, Entekhab, Morvarid and Takht-e Jamshid, had become operational.

"Of course, two other petrochemical projects including Pardis III and Kaveh methanol project, which is the largest methanol plant in the world, will be inaugurated soon," he added.

11 South Pars Phases

Zangeneh said Iran's gas production had been multiplied by 2.4 compared in four years. "It shows that we have reached a balanced state in terms of gas recovery from South Pars gas field."

He noted that the 11th administration was under international sanctions for two and a half years.

"We endured the toughest sanctions on oil exports, revenues and access to banks and equipment under the 11th administration and we managed to implement these projects when sanctions were severely imposed on us," said the minister.

Zangeneh said South Pars development started 19 years ago, adding: "In less than 20 years we are witnessing such greatness in this zone, which indicates the endeavors undertaken by all administrations for the glory for Iran."

He said the inauguration of these phases sent a message to the world. "The South Pars [development] phases were inaugurated under the tough conditions of sanctions and sent a signal to the international community and the region that Iran can operate projects under tough conditions of sanctions as well."

"The world must know that Iran is a technically and industrially powerful country and the inauguration of the phases bears witness to that," he said.

Oil and Environment

Zangeneh also touched on measures taken by the Ministry of Petroleum in Hoor al-Hovayzeh, saying: "As soon as I resumed working in the Ministry of Petroleum I made it clear that I disagreed with drying the Hoor. As we work in the water in the Persian Gulf we have to do the same here if necessary."

The minister said water in the West Karoun area was shallower than in the Persian Gulf, imposing heavy costs on the Ministry of Petroleum.

"However, the Ministry of Petroleum in the 11th administration did not inflict any damage on Hoor al-Hovayzeh and by conducting activities in shallow water in the Hoor, it has prevented the drying up of the Hoor and the destruction of ecosystem in this area," he added.

Referring to environmental activities in Assaluyeh, Zangeneh said: "Regarding flares, we have here in Assaluyeh many flares which will be put down in one or two years. The reason is that regulating the flares is time-consuming. Most of our units are being launched and they need regulation. Furthermore, older units are in much better conditions now and their gas flaring is improving from day to day."

Referring to air pollution in Khuzestan Province due to the flares, he said: "The most important measure we have taken in this regard was Amak project (associated gas gathering project). Acid gases have been eliminated and carried to Razi Petrochemical Plant for production."

He also cited incentives for reducing flare gases as readiness for ceding flare gas projects to prospective investors at very low price.

        South Pars Output Exceeds 1 tcm

Zangeneh said the South Pars output reached 575 mcm/d in March, adding: "During the first four-months of the [calendar] year 1392 (started March 21, 2013), this figure was 240 mcm/d and the average production in that year was 270 to 280 mcm/d."

"If we take into account the average production in the year 1392 when the 11th administration contributed to output enhancement or take into account the average output of the preceding year, it can be said that gas production in South Pars has now nearly doubled," said the minister.

Zangeneh said the total South Pars gas output reached 570 bcm up to March 2013. "Total production from South Pars gas field reached 1,060 bcm, which is nearly double, by" March 2017, he said.

IPC Inevitable

Zangeneh referred to IPC, saying: "We exhaust our efforts for the finalization of the contracts

. My colleagues and I are very serious in this regard. Several technical and commercial contract working committees have been established and each group is dealing with one of prioritized contracts."

Regarding the timeframe for the signature of the contracts, he said: "Fifty percent is up to us, and we are ready, but the remaining 50% depends on the other party to see if they are ready to sign contracts with us. I am not aware of their intentions."

He added: "Implementation of [new] oil contracts is necessary and inevitable for the development of the country."

Zangeneh reiterated that he is against production sharing agreements, saying:" Some people may be critical of the new model of oil contracts, but their criticism does not target the type of the service contract. They rather recommended production sharing contracts, which I have always been opposed to and am still opposed to in light of Iran's current political, social and economic conditions"    

Gas Exports to Iraq

Zangeneh touched on Iran's gas export strategy, saying: "a Gas exports to Iraq has been finalized and will start soon. But before that we had the problem of opening LC with the Iraqi government, which I think will soon be resolved and exports from Naftshahr will start."

He said that Iran would be supplying at least 50 mcm/d of gas to Iraq, adding that the pipeline for that purpose was constructed.

Zangeneh also said that Turkey was among destinations for Iran's gas exports.

He added that gas exports to Pakistan and Afghanistan were also among Iran's gas strategies.

Highlighting the importance of Persian Gulf region for gas exports, he said: "The Ministry of Petroleum's policy is clear in this sector. Sufficient incentives have been offered, but political conditions must be also provided."

"Gas export is different from spot or single-cargo sales of commodities like gas condensate or oil products. For gas export, the two states need to enjoy very good relations," he said.

No Intention of Revenge on Qatar

Zangeneh also touched on the involvement of France's Total in the development of Phase 11 of South Pars, saying: "Our negotiations are under way quickly in terms of drafting the contract and I think that the talks will end soon. But they may be waiting for the result of Iran's presidential elections and then sign the contract."

Regarding rivalry with Qatar on recovery from South Pars, the minister said: "We have no intention of confronting Qatar. We have no such intention. We do our own job and they do theirs. They eye two development phases which total 56 mcm. We have to be serious in preserving the current level of our production."

Asked if Iran would take action as Saudi Aramco offers special discounts to certain refiners in Asia in four certain months, Zangeneh said: "Like in the case of Qatar, we seek no confrontation with anyone. However, we will try to maintain our market."

He said that demand for Iran's oil was higher than its supply.

"Some time ago an Indian party had announced it would reduce oil purchase from Iran and some had expressed concern. But I said that demand for Iran's oil outweighs our export and there is nothing to worry about.

"I don't worry at all and whenever it is necessary we will compete in this market while [respecting] commercial principles," said Zangeneh.

OPEC, non-OPEC Successful in Cooperation

Asked about Iran's position on the possibility of extension of OPEC's decision in its next ministerial meeting in May, Zangeneh said: "OPEC and non-OPEC countries have managed during this time to have new historic cooperation, that has been successful cooperation, and from month to month the level of OPEC and non-OPEC compliance  has increased" on reducing their output.

The market has shown its seriousness, he said. "It has been shown in practice that this decision has been successful because although prices were falling for some 20 days they still rallied to around $55. It came out that OPEC was respecting its output reduction [deal]."

"Based on the information I receive from within OPEC and relation between OPEC and non-OPEC countries, I think that most members are willing to see this decision continue and if so, we will also support the decision of the overwhelming majority," he said. "If everyone abides by the decision, so we will continue it."

Asked to comment on the point that Iran would have to curtail its output as its production was hitting 4 mb/d, Zangeneh said: "If we make a commitment we will stand by our commitments. But there is a difference between the actual production level and the figure announced by secondary sources. However, we will remain faithful to the figure we agree upon."

Oil Deal with Rusia

Zangeneh said that Tehran and Moscow had reached agreement for Iran to sell 100,000 b/d of oil to Russia.

He said that Russia would pay in euros for the oil it would purchase from Iran.

"The Central Bank of Iran has agreed to earmark half this sum to the purchase of commodities and services from Russia. But no certain commodities and services have been specified and we have had no intention of doing so," said the minister.

"In fact any commodity and/or service that we would purchase from Russia would be compensated by half the value [of oil we sell to Russia] and we will receive payments for the rest in euros," said Zangeneh.

He said Iran would send oil cargoes to Russia in return for LCs provided by a well-known bank.

"The agreement has been signed, but it depends on the Russians to decide to start receiving the cargoes and then the relevant LC should be opened," said Zangeneh.

Tillerson, Oil and Russia

US President Donald Trump's nomination of Rex Tillerson as his secretary of state has elicited mixed reactions. Tillerson has good experience in energy issues and was long serving as the CEO of the world's second largest oil company ExxonMobil. His activities were limited to economy and he has no experience in political and security issues. For this reason, his appointment as the secretary of state drew criticisms. Besides, an important point which caused controversy about Tillerson was his close relationship with Russian President Vladimir Putin. This relationship was challenged in the US; however, it gave rise to optimism about improvement in trade ties between the two countries particularly in the oil and gas sector.

This article reviews Tillerson's role in the future of US-Russia relations and its effects on the oil market.

After being named secretary of state, Tillerson said he would cut all his financial and business ties with ExxonMobil in a bid to avoid conflict of interests.

Tillerson has also "committed" to the State Department that he would sell the more than 600,000 shares in ExxonMobil he currently owns in case he was confirmed secretary of state.

"Under the agreement developed in consultation with federal ethics regulators, if Tillerson is confirmed as secretary of state, the value of more than 2 million deferred ExxonMobil shares that he would have received over the next 10 years would be transferred to an independently managed trust and the ExxonMobil share awards would be cancelled," ExxonMobil said in a press release. "The trust would be prohibited from investing in ExxonMobil and the trustee would manage the assets consistent with government ethics rules. Payments to Tillerson from the trust would be subject to the same 10-year schedule that the cancelled awards would have had if they had continued in place."

Oil Firms Back Tillerson

In spite of the alleged agreement, Tillerson remains interested in ExxonMobil. He is even likely to get his post back after his tenure ends.

Other US oil companies threw their weight behind Tillerson as secretary of state. He owes his nomination at this post to veteran American politicians who own shares in oil companies. Robert Gates, a former chief of the Central Intelligence Agency (CIA) and a former secretary of defense, had recommended Trump to pick Tillerson as his secretary of state. Former US secretary of state Condoleezza Rice made a similar recommendation in her meeting with Vice President Mike Pence. Gates and Rice co-own a company that advises ExxonMobil. Dick Cheney, the hawkish former vice president, also lobbied for neoconservative Tillerson to become secretary of state. Cheney's relations with oil companies were no secret to anyone even when he was serving as vice president in the administration of George W. Bush.

Tillerson and Putin

Tillerson's appointment at the head of US diplomacy coincided with sharp criticisms of his close relations with Russia and his stance on the US sanctions on Russia. Not only Democrats but also outspoken Republicans like Senators Marco Rubio, John McCain and Lindsey Graham called into question the close ties between ExxonMobil and Russia.

Some US media such as The Washington Post claimed that Russia meddled with Tillerson's nomination as it did with Trump's victory in the 2016 election. Tillerson made it clear that he had good relations not only with Putin but also with many other Russian officials.

Over the past years, a number of factors had pushed Tillerson closer to the Russians.

First and foremost is that Tillerson was a close friend of Putin. Their friendship dates back to the 1990s when Tillerson was leading an ExxonMobil project in Russia's Sakhalin. These ties were strengthened later on when Putin came to power in 1999.

In 2013, the Russian president awarded Tillerson Badge of Friendship in a show of gratitude in response to Tillerson's efforts made aimed at boosting energy cooperation with Russia.

Second, Tillerson was instrumental in trade cooperation with Russia and he was a major partner for Russian energy companies. Tillerson's dealings in Russia involved joint venture projects with national oil companies in order to have preferential access to energy resources. When Tillerson took over as ExxonMobil chief he pursued this strategy in Qatar, United Arab Emirates and Russia. This method of partnership allowed national oil companies to benefit from the technical power and sufficient capital of the United States. Following the same strategy, ExxonMobil managed to find a strategic partner in Russia and reach agreement with Rosneft. ExxonMobil and Rosneft have agreed to conduct exploration and development projects in the Black Sea. It was a great advantage for Rosneft as it had limited experience in deep water exploration. For financing the project, Kremlin developed an offshore tax regime for ExxonMobil in order to sweeten the contract. This deal was of such strategic importance to Moscow that Putin in person attended the signing ceremony.

Also in 2011, ExxonMobil reached agreement with Rosneft, whose 75% of shares the Russian government owns, in 2011 for the US company to discover oil in Arctic and Siberia. It also gave Rosneft the chance to operate in Texas and the Gulf of Mexico. This agreement was signed only a few months after BP attempted a similar contract and failed.

During the signing ceremony, the Russian president said his country would fully support ExxonMobil. He noted that Tillerson could increase his $200 to $300 billion direct investment in this project to $500 billion. After that, 11 more contracts were signed between ExxonMobil and Rosneft.

Third, Tillerson was a critical of US sanctions imposed on Russia over the crisis in Ukraine. He believed that these sanctions would harm US-Russia relations. For instance in 2014, addressing the General Assembly of ExxonMobil shareholders, he openly criticized the sanctions imposed on Russia as they resulted in the suspension of one of its contracts with Rosneft.

 When Tillerson, who has been a  longtime friend of Putin and Igor Sechin, CEO of Rosneft and former deputy prime minister  of Russia, realized that his  company's name was in the list of  companies banned to trade with Russia considered the US-EU sanctions harmful.

Tillerson's approach vis-à-vis Russia and his close cooperation with Putin and Russian companies strengthened speculation that his appointment at the post of secretary of state would cause a significant jump in Moscow-Washington relations. Tillerson in his new post created hope that a new atmosphere would take shape in the relations between the two countries as he is close to Russian politicians. That caused worries in the US Congress, but was welcomed in Russia.

However, the turn of time showed that one could not place much hope in an improvement in the US-Russia ties. Political and security differences between the two countries in different geopolitical sectors stymie better ties between Moscow and Washington. That is why Tillerson was not received warmly during his first visit as US secretary of state to Russia.           

In his capacity as ExxonMobil CEO, Tillerson was able to expand his oil company’s ties with Russia, but as secretary of state he would not be influential enough to bring any improvement due to deep-seated differences between the two countries. Of course Trump and his supporters believe that Tillerson is able to separate political and economic issues and empower US companies particularly oil and gas firms to operate projects in Russia.

The accuracy or fallacy of such an impression would be known after some time.

1-African Petroleum Mulls Deepwater Drilling

African Petroleum (AP) has signed non-binding heads of terms and a binding exclusivity agreement with an unnamed oil and gas company experienced in deepwater drilling.

The arrangements would give the incoming party a 70% operated interest in AP’s SOSP production-sharing contract off Senegal and the A1 and A4 licenses offshore The Gambia.

Under the initial eight-week period of the exclusivity agreement, both parties will finalize negotiations with the respective governments in order to amend the work commitment off Senegal and to enter the next phase of the licenses in The Gambia.

The incoming party is currently looking to fund 100% of at least two deepwater exploration wells at a cost of up to $35 million each; a 3D seismic acquisition program; pre-stack depth migration processing/reprocessing; and potentially 100% and 85% of two further wells at a cost of up to $35 million per well.

AP CEO Jens Pace said: “Whilst final farm-in agreements are subject to completion and the successful outcome of negotiations with the governments in Senegal and The Gambia, we are confident that the proposed partner’s reputation, strong balance sheet and appetite to explore the potential of these exciting licenses with the drill bit, will greatly increase our ability to conclude the discussions with an outcome that benefits all parties.”

2-CNOOC Fulfils Production Targets

CNOOC achieved 14 commercial discoveries and successfully appraised 25 oil and gas structures last year.

Oil and gas reserves from new finds offshore China continued to grow, and the company made breakthroughs in exploration in new areas.

Despite lower oil prices, CNOOC’s reserve replacement ratio (excluding economic revisions) was 145% for the year. At the end of 2016, the company’s net proved reserves totalled about 3.88 Bboe.

In addition, the company met its annual oil and gas production target despite further capex cuts, producing 476.9 MMboe.

CNOOC’s four offshore projects planned for 2016 have started operations as planned – these are the Kenli 10-4 oilfield, Panyu 11-5 oilfield, Weizhou 6-9/6-10 comprehensive adjustment project, and Enping 18-1 oilfield.

Yang Hua, chairman and CEO, said: “In 2016, the company has maintained a strong cost competitiveness despite low oil prices and sluggish global economic growth.”

3-Cooper to Operate Offshore Australia

Cooper Energy has contracted Subsea 7 to perform subsea installations for the Sole gas development in the VIC/RL3 permit offshore southeast Australia.

The Sole field is in the eastern part of the Gippsland basin, 40 km (25 mi) offshore Victoria.

Subsea 7’s scope comprises the subsea tieback of the Sole well to the existing Orbost Gas Plant, which involves fabrication and installation of 64 km (40 mi) of pipeline, associated spool and manifold, laying of a 64-km umbilical and subsequent commissioning.

The company has started project management and engineering in Perth and will begin offshore operations in 2018, subject to a final investment decision next month.

Following a recent transaction Cooper now has 100% equity in the field, which it aims to bring on-stream by March 2019, and the company is currently arranging finance for the project. Development will involve drilling two horizontal wells.

The company has signed gas sales agreements with Alinta Energy, EnergyAustralia, and AGL Energy, and has agreed with APA to upgrade the Orbost facility to handle Sole’s production.

Cooper also believes it could profitably develop the nearby offshore Manta gas/condensate field in permits VIC/RL 13, VIC/RL 14, and VIC/RL 15.

This would entail drilling the Manta-3 appraisal well, followed by subsea installations and construction of a pipeline to transport produced gas and liquids to Orbost for separation and processing.

In addition, the well would investigate the potential for further gas above and below known gas-bearing reservoirs.

Commercialization of Manta in coordination with Sole gas would offer project synergies and development planning is taking this into account.

Manta’s development would likely form a second-phase Gippsland gas project, commencing with drilling of the appraisal well coordinated with the rig program for the Sole development well in 2018.

Work on Manta development would probably start soon after Sole commences production, with first gas following around two years later.

4-2D Seismic Survey Offshore Argentina

Spectrum, in partnership with BGP Marine, has started a 35,000-km (21,748-mi) multi-client 2D seismic survey covering 435,000 sq km (167,954 sq mi) offshore Argentina.

In cooperation with YPF S.A. and the authorization of the Ministry of Energy and Minerals, the survey will provide a detailed seismic grid over this under-explored frontier area of Argentina, allowing for basin-wide studies of the area as well as prospect/lead level interpretation studies for upcoming license rounds.

Data is being acquired with a 12,000-m (39,370-ft) streamer with continuous recording to enable extended recording lengths and high fold data to enable full interpretation from Moho to water bottom. The data will be processed with PSTM, PSDM, and Broadband products with first deliveries expected in early 4Q 2017.

The new data will be used to assist the ministry in placement and design of parcels for the future license rounds offshore Argentina.

Richie Miller, executive vice president Multi-Client Americas, said: “With the commencement of our first program in Argentina we again start to build a core area for Spectrum to grow and expand on. There has been no deepwater exploration in Argentina and this survey will allow industry to get a look at a frontier area for the first time with modern long offset high fidelity data…”

This survey is supported by industry funding.

5-Oil Field On-Stream in Danish North Sea

Wintershall Noordzee has started production from the Ravn oil field in block 5/06 in the Danish North Sea.

This is the company’s first operated development project in the Danish sector.

Oil produced from a subsurface depth of around 4,000 m (13,123 ft) flows to a new production platform located 300 km (186 mi) north of Den Helder.

Production is then transported via an 18-km (11.2-mi) subsea pipeline to Wintershall’s A6-A processing platform in the German sector, for onward delivery through the existing export network south to the Netherlands.

Wintershall has applied an “Appraisal through Development” concept, which entails continuously compiling data on well productivity and the reservoir’s lateral extent of the reservoir. It aims to use this data for future field development options in the region.

Wintershall operates Ravn with a 63.64% interest, in partnership with the Danish state-owned oil and gas company Nordsøfonden (36.36%).

U.S. Drillers Add Oil Rigs for 14th Week

U.S. drillers added oil rigs for a 14th week in a row, extending an 11-month recovery that is expected to boost U.S. shale production in May in the biggest monthly increase in more than two years.

Drillers added five oil rigs in the week to April 21, bringing the total count up to 688, the most since April 2015, energy services firm Baker Hughes Inc said.

That is more than double the same week a year ago when there were only 343 active oil rigs.

U.S. crude futures dropped below $50 a barrel, for the first time in two weeks and putting it on track for its biggest weekly loss in six weeks, due to doubts the

OPEC-led production cut will restore balance to an oversupplied market, especially as U.S. drillers keep producing more oil.

U.S. shale production in May was set for its biggest monthly increase in more than two years as producers stepped up their drilling activity, according to U.S. energy data.

Analysts projected U.S. energy firms would boost spending on drilling and pump more oil and natural gas from shale fields in coming years with energy prices expected to climb.

Futures for the balance of 2017 were fetching around $50 a barrel and calendar 2018 was trading at about $51. After taking a hit last year when dozens of U.S. shale producers filed for bankruptcy, private equity funds raised $19.8 billion for energy ventures in the first quarter - nearly three times the total compared with the same period last year, according to financial data provider Preqin. Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, forecast the total oil and gas rig count would average 842 in 2017, 1,037 in 2018 and 1,170 in 2019. Most wells produce both oil and gas. That compares with an average of 762 so far in 2017, 509 in 2016 and 978 in 2015, according to Baker Hughes data.

Analysts at U.S. financial services firm Cowen & Co said in a note that its capital expenditure tracking showed 57 exploration and production (E&P) companies planned to increase spending by an average of 50 percent in 2017 over 2016.

 That expected spending increase in 2017 followed an estimated 48 percent decline in 2016 and a 34 percent decline in 2015, Cowen said according to the 64 E&P companies it tracks.

Total CEO Sees Oil prices Tumble

Oil prices could fall again by the end of the year due to a rapid increase in U.S. shale production, the chief executive of French oil and gas giant Total said.

Crude has recovered from lows reached in January 2016 and has mostly hovered above $50 a barrel since the beginning of the year following an agreement by the Organization of the Petroleum Exporting Countries to cut production.

"The price may fall again ... U.S. producers who have recovered quickly, will regenerate an influx of supply by the end of the year and this could have a negative impact on the markets," Patrick Pouyanne said during a conference in Paris.

U.S. shale oil producers are planning to expand production following the rebound in prices.

"The OPEC agreement is in place and working very well," Pouyanne said. "I think it (OPEC agreement) will be extended, but in simple terms, the short-term effect on the markets is not immediate because stocks are extremely high."

Pouyanne said it will take another 18 to 24 months, rather than six months, for demand to outstrip supply.

Oil prices regained some ground after steep losses the previous day, as Kuwait said it expected the OPEC-led effort to cut supplies would be extended beyond the middle of the year.

Russia's Novatek to Keep Output

Novatek, Russia's largest non-state natural gas producer, is seeking to increase its resource base to stabilize gas output and keep its domestic market share steady, Leonid Mikhelson, head of the company, said.

Mikhelson also said import-export agencies from Germany and Sweden had agreed to help finance the Yamal LNG project, though he declined to disclose details.

Yamal LNG, with total inward investment set at $27 billion, has almost completed fund-raising thanks mainly to investors from China.

Novatek is the main shareholder in Yamal LNG, which is due to start producing liquefied natural gas this year, with a stake of 50.1 percent.

Mikhelson, Russia's richest businessman according to Forbes magazine, said the company was looking to boost its resources in the Arctic Yamal region, which accounts for around 70 percent of Russian gas resources.

"We are looking into the possibility, apart from the creation of a resource base for Yamal LNG, of creating an additional resource base in the region to increase our production potential," he told reporters before Novatek's annual general meeting in Moscow.

"I think by the end of the year we will be able to form that resource base, which will allow us to keep gas production at a steady plateau in the region and keep our share of the domestic market."

Last year, Mikhelson assessed Novatek's share of Russian gas production at 9 to 10 percent. He said its share of the domestic supply market, where state-owned Gazprom is a dominant force, was around 20 percent.

In 2016, Novatek's gas production declined by 2.7 percent to 66.1 billion cubic meters, while output of liquids, or crude oil and gas condensate, jumped by 36.8 percent to 12.4 million tonnes.

France's Total and China National Petroleum Corp each control 20 percent of Yamal LNG, while China's Silk Road Fund owns 9.9 percent.

South Korean Tender Stirs Up Market

Asian spot LNG prices jumped, buoyed by hopes Korea Gas Corp's new tender would match past buying sprees and by emerging demand from China and Japan.

Spot prices for June delivery rose to $5.70 per million British thermal units (mmBtu), but traders cited sharply divergent views on pricing, saying the disagreements contributed to market inertia.

Still, Korea Gas Corp's tender for June and July supply - set to close on April 26 - immediately stirred up bullish offers, rescuing an otherwise muted trading week.

The last time Kogas entered the market to buy two cargoes in December 2016, it ended up awarding up to 11.

That was only one of a number of factors contributing to LNG snapping a 15-week losing streak, with Japan's Tohoku Electric seeking a May/June cargo alongside trading giant JERA's limited spot needs, Portugal's EDP seeking a June/July cargo, plus demand from Spain, India and China.

But resumption in production at two Australian LNG export plants - Chevron's Gorgon and Woodside's North West Shelf - left the rationale for a price rebound less clear.

Demand, even in top-tier buyer Japan, is lackluster and weather forecasts do not support a dramatic shift any time soon. Nigeria and Russia, meanwhile, have both approached the market with new supply.

"The market in Asia is basically anywhere between $5.50-$5.80, its pretty wide and nobody exactly knows there's a lot of inertia," one trading source said.

So far, jitters over Egypt's nascent programme of cargo deferments - a potentially bearish signal for global markets - have taken a back seat to more immediate developments, such as Kogas purchases, but Egypt could come to dominate thinking once the scale of its program becomes clear.

Surging production from new gas fields is squeezing out demand for costly foreign imports, leading Egypt to consider deferring as many as 25 shipments this year and many more in 2018, according to various sources.

Yet only a small portion of deferrals have actually been agreed with Egypt's LNG suppliers so far. Most of these are trading houses but some are state-backed energy companies.

Furthermore, one trader said some sellers had hoarded supply for May in anticipation of supply disruptions that never came true.

"We will see how sellers react in June, given they lost value in May," the trader said, implying potential for supply releases.

In the Atlantic, demand continued to emerge from utilities in Spain, driven by low hydroelectric reserves, faltering renewables output and nuclear issues.

Spanish bids for LNG ranged from flat to UK gas hub prices to a 10 cent premium in some cases, several sources said.

Goldman Optimistic About Oil Market Fundamentals

Goldman Sachs Group Inc. says there’s no fundamental evidence in the oil market to justify recent selloff in prices.

The bank finds the pace of declines in U.S. crude inventories encouraging, with an acceleration in drawdowns expected through the second quarter as OPEC cuts output and demand grows, according to a report dated April 20. Meanwhile, a mid-week slide in prices was driven by crude trading through its 50-day and 100-day moving averages, Goldman said.

Goldman is reiterating its confidence in oil at a time when investors are fretting over whether U.S. production, which has climbed to the highest level since August 2015, will undermine curbs by the Organization of Petroleum Exporting Countries and its allies.

 "We view technicalities rather than fundamentals as the driver of this move lower,” analysts including Damien Courvalin and Jeffrey Currie wrote in the report. The U.S. inventory data was “in line with expectations,” they said, reiterating the bank’s sequentially higher second-quarter Brent price forecast of $59 a barrel.

 The sell-off occurred an hour after the release of this U.S. data and accelerated as prices traded through their 50 and 100 day moving averages, a repeat of the March 7 and October 29 sharp decline in prices,” the analysts wrote. The “decline also featured an increase in open interest, suggesting that like in these previous instances, new shorts were the drivers of the move lower.”

Goldman also believes gasoline demand is probably being understated, “with the more accurate ethanol implied demand metric pointing instead of resilient gasoline demand growth, while distillate demand remains strong,” according to the report.

Russia to Discuss Extending Oil Cut With OPEC

Russian Energy Minister Alexander Novak said a decision on extending a global pact to cut oil production had not yet been taken, but would be discussed with OPEC on May 24.

The Organization of the Petroleum Exporting Countries and other leading oil producers have pledged to curb output by 1.8 million barrels per day (bpd), with Russia's contribution of cuts amounting to 300,000 bpd to be gradually phased in.

The goal was to reduce bulging global inventories and lift oil prices. Despite a modest recovery in the market, oil stocks remain high and the focus is now on whether OPEC and non-OPEC producers will prolong the cuts into the second half of 2017.

OPEC's next policy-setting meeting is set for May 25, with a decision expected at that time on whether to extend the curbs.

Novak said information on the oil market's situation and forecasts were being digested in order to draw a conclusion.

"The OPEC Secretariat will send the information to all the signatories of the agreement and we will discuss the issue during a ministerial meeting on May 24," said Novak.

He was believed to be referring to a joint committee of ministers from OPEC and non-OPEC producers that monitors compliance with the accord.

"There are no firm decisions on that. Each country is looking into the matter by itself so it can make its proposals and evaluations," said Novak, who was on a visit to Tokyo.

He also said Russia's oil output cuts had reached 250,000 barrels per day (bpd) and would hit a target of 300,000 bpd by the end of April.

Novak said the oil market was improving with production cuts by OPEC and non-OPEC members, including Russia, trimming a surplus that had squeezed prices for years.

"The situation has gradually been improving since the beginning of March," Novak said. "The oil surplus has been reduced. The situation is getting more and more stable and there's less volatility on the market."

Novak said current oil prices reflected the market situation, with benchmark Brent around $53 a barrel.

OPEC sources said an internal assessment was that without an extension, oil could slide to $30-40 a barrel.

 

-Saudi Efficiency Review Finds Cost Savings

The body set up by Saudi Arabia to cut the costs of government projects has identified up to 17 billion riyals ($4.53 billion) in further efficiency savings, the kingdom's finance minister told Reuters.

Government sources had told Reuters earlier that Riyadh was ordering ministries and agencies to review billions of dollars' worth of unfinished infrastructure and economic development projects with a view to shelving or restructuring them.

The action forms part of a reform plan by the world's top oil exporter aimed at shifting its economy away from reliance on hydrocarbon revenues and paring back support for a generous welfare state to cope with the reduction in crude prices.

Mohammed al-Jadaan said this was the second major effort by the Bureau of Capital and Operational Spending Rationalization since its establishment, after previous efforts highlighted 80 billion riyals of savings in 2016.

"They just were making sure that they (the projects) are done in the most efficient manner. They are about to conclude their work and they have identified about 15 billion riyals or 17 billion riyals of savings so far," Jadaan said, without elaborating on the nature of the savings.

Lower oil prices have left Saudi battling huge budget deficits. The deficit is expected to hit 198 billion riyals or 7.7 percent of GDP this year, after peaking at 367 billion riyals or 15 percent of GDP in 2015.

The introduction of a 5 percent value-added tax should also bolster the Saudi government's coffers. Jadaan said Saudi is "ready and willing to implement" the tax on schedule on Jan. 1, 2018 and it could happen without other Persian Gulf countries.

The six Arab monarchies of the [Persian] Gulf Cooperation Council are all aiming for an identical start date for the tax, but economists and officials in some countries have said privately that simultaneous introduction may not be feasible.

This is due to the complexity of creating the administrative infrastructure to collect the tax and the difficulty of training companies to comply with it in a region where taxation is minimal

. Korean Buyers Seek to Replace Mideast Oil

Oil buyers in South Korea are expected to take advantage of relatively cheap Brent against Dubai and step up purchases of low-sulfur crude in early third quarter, reducing demand for the Middle East oil, four refining sources said.

Refiners in the world's fifth largest crude oil importer are seeking crude from the North Sea and Africa, they said, which could help reduce surplus oil in Europe that was accumulated during the peak refinery maintenance season.

"We are actively looking at Brent-related crude grades," said Kim Woo-kyung, a spokeswoman at SK Innovation, owner of South Korea's top refiner SK Energy.

SK Energy bought its first Russian Urals crude in a decade earlier this year.

An official from another South Korean refiner said they are also considering buying Brent-linked crude such as those from Africa as prices of Brent oil have weakened. He declined to be named due to the sensitivity of the matter.

A slowdown in China's oil demand also created more opportunities for South Korean buyers to purchase arbitrage supplies, a third buyer said.

The premium for June Brent to Middle East crude benchmark Dubai dropped below $1 a barrel this month, the narrowest since August 2015, prompting some buyers to switch to sweet crude which is easier to process.

Brent's market structure is also in a wider contango than that for Dubai, making long-haul shipments feasible. In a contango market, oil becomes more expensive in later months.

Six million barrels of North Sea crude were loaded in April for Asia, with another 2 million barrels planned to be loaded next week onboard supertanker Sara for South Korea, trade flow data on Thomson Reuters Eikon showed.

Another 1 million barrels each of Urals crude and Libyan El Sharara crude will arrive at Yeosu, South Korea, in May, the data showed.

"There are still some arbitrage cargoes to Asia arriving in July," the third buyer said, referring to oil from Europe and the United States.

Hyundai Oilbank bought the country's first import of U.S. Southern Green Canyon (SGC) crude this year.

South Korean refiners also receive freight rebates from the government for shipping non-Middle East crude on supertankers as an incentive to diversify imports away from the Persian Gulf.

South Korea imports more than 80 percent of its oil from the Middle East

- Italy's Saipem Turns to Wind

Italy's Saipem is working to expand new lines of business including wind farms to help it cope with a slump in order books among oil services groups.

Oil contractors around the world have come under pressure as weak oil prices force oil majors to cut billions of dollars in costs and delay final investment decisions on projects.

"We're looking to grow in areas like wind farm projects, especially in the North Sea, and dismantling oil and gas platforms," Saipem's chief executive Stefano Cao said following the company's first quarter results.

Production cuts by OPEC have helped crude prices, but recovery for oil contractors is expected to be uneven, with those finding it tougher to cut capacity and costs lagging others with more flexible business models.

Saipem, which has both onshore and offshore drilling assets, is a market leader in subsea engineering and construction (E&C) including the world's most expensive oil field, Kazakhstan's Kashagan.

"Pressure continues this year, especially in offshore E&C and few initiatives are being sanctioned... but we are on the right path" Cao said.

Saipem, jointly controlled by oil major Eni and state-lender fund FSI, said earlier it was sticking to forecasts for the year after operating profits in the first quarter fell 21 percent.

A slowdown in the group's core offshore E&C business as well as in drilling led to a 20.3 percent fall in revenues to 2.3 billion euros ($2.5 billion) in the period.

"Saipem's order intake was truly disappointing. Although we were prepared for a weak quarter, we believe that group's order intake is the lowest since 2001," broker Mediobanca said, but added margins had improved.

At 0816 GMT Saipem shares were up 1.9 percent, while the European oil and gas sector was down 0.5 percent.

Some analysts have said Saipem will need to streamline its business and sell off assets to help fund development.

But Cao denied a break up was being considered. "No way whatsoever. I'm not here to break up the company," he said, adding the group could consider joining forces with others to help improve its onshore drilling performance.

Canada's Oil Sands Acquisition Pool Dwindles

As international energy companies retreat from the Canadian oil sands sector due to depressed oil prices, a fast-shrinking universe of potential buyers may leave some stranded in the high-cost, capital-intensive sector.

Global producers are bailing on their oil sands investments due to higher development costs, limited export pipeline capacity to get crude to market and concerns about high carbon emissions in the sector.

International companies once drawn by the long-life assets that can produce for up to 50 years during the oil sector boom are discovering the economics do not work as well in a low-price environment.

But to get out, they have to overcome a simple equation: there are more sellers than buyers for the oil sands.

The three biggest domestic producers - Suncor Energy, Canadian Natural Resources Ltd and Cenovus Energy - are digesting multi-billion dollar deals, and have little room for more acquisitions, industry participants say. Global companies like ConocoPhillips and Marathon Oil Corp prefer to pile into cheaper U.S. shale plays such as the Permian basin instead.

"The market is pretty thin for oil sands buyers," said Janan Paskaran, an M&A lawyer at Torys LLP who advises domestic and international energy companies.

"There are three or four buyers out there that have said they are interested in increasing exposure to oil sands, but they've already done their shopping," he added. "I don't see any new entrants."

BP Plc has joined Chevron Corp in weighing the sale of its oil sands stakes, Reuters has reported. This follows decisions by Royal Dutch Shell, ConocoPhillips and Marathon to dump about $22.5 billion worth of largely oil sands assets this year.

Companies that planned further divestitures from oil sands will either have to patiently sit on their assets or, as in the case of Statoil ASA and Marathon, accept a loss on their investments.

"There's not enough financial wherewithal in Canada to snap up all of the foreign investment that might be exiting right now," said Rafi Tahmazian, portfolio manager at Canoe Financial, referring to the domestic Canadian energy industry.

"You end up having to decide as a foreign company, am I willing to get rid of this cheap or do I hang on to it?"

Statoil booked an impairment charge of $500-$550 million, when it sold its oil sands assets to Athabasca Oil Corp. Similarly, Marathon sold its stake in the Athasbasca Oil Sands Project for $2.5 billion, having paid $6.2 billion to get into the region in 2007.

While some Canadian companies have stepped forward to take their place, their resources are limited.

Cenovus' share price tumbled after it loaded up on debt to buy ConocoPhillips assets. Suncor and Canadian Natural are in better shape financially but may have limited appetite for further deals after major acquisitions in the last 15 months.

Sources said Husky Energy, BP's joint venture partner in the Sunrise project, is not keen to increase its exposure to the oil sands but may consider buying BP's stake if the price is attractive.

"The prices will adjust to the supply of buyers and likely move downward," said John Stephenson, president of Stephenson & Co Capital Management, which owns shares in Cenovus and Canadian Natural.

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Global oil and Asian product market, April

Crude oil prices sharply declined during March to post the lowest since the beginning of 2017. Price  has been damaged by high crude inventories and the impact of a consistent growth in U.S. rig counts over the last seven months. In addition, lower economic growth from China and worries over Russian production also contributed to the decline in prices. It seems that OPEC and non-OPEC production cuts failed to draw down the global inventories.

According to the latest report  published by Baker Hughes, U.S. oil rig count increased by seven to  reach 609, the highest level in the last seventeen months. U.S. oil producers are likely to add more rigs in the coming months considering a potential growth in capital investments.

Apart from the U.S. production, lower than expected output cuts from Russia reduced traders’ optimism over the production cut agreement. Russia has lowered its output by 120,000 barrels a day in the first two months of this year, compared with agreed cuts of 300,000 barrels a day.

Lower than expected growth in the Chinese economy also impacted oil prices. China expects a GDP growth of 6.5%, lower than the previous forecast for a growth of 6.7%. Despite several negative indicators, oil prices had very limited downside movement, thanks to higher than expected compliance from OPEC producers. Starting April, oil prices speed up and reach to the levels was experienced in the year 2017.

Asian Product Markets

All products' cracks-products prices versus Dubai prices-increased during April compared to March.

Light Distillates (gasoline, naphtha)

Naphtha cracks improved slightly with some support coming from lower arbitrage flows from the West, expected in May. Asian petchem demand is still resilient thanks to healthy margins. However, there was a seasonal decline in the market due to the lower LPG prices. Lower LPG prices had a significant impact on feedstock switching dynamics partly due to strong aromatic prices. Looking forward, naphtha cracks is expected to be under pressure due to seasonal feedstock switching to LPG and petchem cracking capacity maintenance.

Gasoline cracks improved by strong demand and peak refinery maintenance. Tightening balances in Asia including tighter supplies from Chinese refinery supported the market. This was mostly due to the fact that China decreased the country’s gasoline export quota. Moreover, the continued strengthening in the Atlantic Basin was supporting the market.  Over the coming weeks, gasoline cracks is expected to remain supported by tightening supply.

Middle Distillates (gasoil, jet fuel)

Jet fuel and gasoil markets were supported by tighter supply, owning to regional refinery turnarounds. Singapore stocks declined to a two-month low. More support came from the outage at the Qatar Ras Laffan condensate splitter, as at least one export cargo of jet fuel has been cancelled. Additionally, demand in Japan has recently increased, likely supported by cold weather in the Northern part of the country. Going forward, middle distillates cracks are likely to remain close to current levels despite a seasonally lengthening regional balance as some support will likely come from improving arbitrage economics amid a tightening European balance.

Fuel Oil

Fuel oil market weakened on low Singapore inventories and weak arbitrage economics from West to the East. The arbitrage from West to the East was less economic due to high VLCC freight rates. Moreover,  fuel oil supply in Japan fell, amid the combined effect of refinery maintenance and CDU capacity shut downs ,  keeping export availability low.  On the demand side, there were some supports from Pakistan.  

 

Tehran Hosts 13th IPF

Iran Starting Second Jump in Petchem Sector

The 13th Iran Petrochemical Forum (IPF) was held in capital Tehran at a time Iran is planning to start a second period of development in its petrochemical sector.

Iran's minister of petroleum is optimistic about the future of petrochemical industry in Iran thanks to the country's nuclear deal with six world powers, known as the Joint Comprehensive Plan of Action (JCPOA).

Bijan Zangeneh said at the opening of the event on April 22 that petrochemical sector was instrumental in Iran's economic growth.

"Iran sits atop the world's largest gas and the fourth largest oil reserves, and in total it holds the largest hydrocarbon reserves. Therefore, no country has as much feedstock as Iran for the petrochemical industry development," he said.

Zangeneh underlined the role of the government and National Petrochemical Company (NPC) in the second jump in the petrochemical industry in Iran, saying: "The government is not playing the main role in this jump; rather it is tasked with steering for manufacturing, development of infrastructure, discovery of new areas, introducing new investment [opportunities] and following up on the supply and feedstock allocation to applicants."

He highlighted a 10% growth in the weight of Iran's petrochemical output and exports in the last calendar year (which ended on March 20) compared with the year before due to the easing of restrictions that allowed more feedstock supply.

"This industry is among leading industries in Iran's economic growth," said the minister.

Zangeneh said Iran would have recorded an 8-million-ton increase in its petrochemical output over a year and a half ending in September 2017.

Competitive Prices and High Rate of Return

Zangeneh also pointed to Iran's advantage of supply of feedstock for developing its petrochemical industry, saying: "The main feedstock for petrochemical industry has been either supplied or will be supplied after implementation of new projects."

Petrochemical plants often depend on oil and gas refineries for their feedstock, but under the administration of President Hassan Rouhani this trend changed.

"For the first time, under this administration, it was decided that projects be envisaged and implemented to supply feedstock to petrochemical plants," said the minister.

Zangeneh said development of Tang Bijar, particularly development of Khami gas reservoirs in the Ahvaz and Maroun fields, as well as other areas with a rich layer for NLG production were among projects under way to supply feedstock to petrochemical plants.

He said that naphtha supply would be remarkable in Assaluyeh in the future, saying: "Siraf refining complex, with a capacity of 480 tb/d of gas condensate, can supply more than 11 million tonnes of sweet and light naphtha on the market annually."

Zangeneh referred to the pricing of butane, propane, NGL and natural gas, noting that relevant discounts would be decided for long-term investments in case investors contribute to the completion of the value chain.

He said that flare gases would be sold at very low prices as part of plans to feed petrochemical plants.

"The prices currently in effect are very competitive and the investors would gain significant profits," said Zangeneh.

$40bn Projects

The minister said $40 billion of projects were envisioned in Iran's 6th Five-Year Economic Development Plan.

"It is clear that we will need foreign investment in order to finance these projects because progress in this industry is not possible by merely depending on domestic sources," he said.

Zangeneh noted that the National Development Fund of Iran (NDFI) was not enough to help develop Iran's petrochemical industry.

He said that either direct investment must be made in petrochemical projects or financial facilities be granted.

Zangeneh said the Rouhani administration was supportive of private sector investment in this industry.

"I suggest that potential investors visit Assaluyeh and Bandar Imam before investing in the petrochemical industry to take a look at what has been done over the past 15 to 20 years in order to have an assessment of Iran's potential in the petrochemical industry and then they can make up their mind," he said.

Zangeneh also said that long-term fiscal exemptions were among advantages of Iran's petrochemical industry.

 

Zangeneh also said that long-term fiscal exemptions were among advantages of Iran's petrochemical industry.

Gas-to-Olefin Units

Zangeneh said the Iranian Ministry of Petroleum was determined to push ahead with developing technologies to convert natural gas to olefins.

"Despite huge efforts over the past four years, establishing such units was not possible in Iran due to sanctions. However, this is a policy of government which would be supported and encouraged," he added.

Zangeneh highlighted investment made in the downstream chain of petrochemical industry, saying: "Creation of capacity for producing 13 million tonnes of ethane, 13 to 14 million tonnes of butane and propane from South Pars gas field and more than 10 million tonnes of NGL has created appropriate conditions for domestic and foreign investment and financing in this industry."

72mn Tonnes Petchems

Marzieh Shahdaei, CEO of NPC, said at the conference that sufficient feedstock and infrastructure had been prepared for the petrochemical industry development post-JCPOA.

"We hope that this year with the completion and startup of seven more petrochemical projects in Iran, the output of petrochemical products in the country will reach 72 million tonnes a year, valued at $9 billion," she said, noting that such an objective would be achievable post-sanctions.

She gave a positive assessment of Iran's petrochemical industry in the last calendar year, adding: "Iran's petrochemical production reached 50 million tons in the Iranian calendar year 1395(started in March 2016)."

Shahdaei said Iran's net petrochemical sales were at 28 million tons, worth $15 billion, last calendar year, adding that 21 million tonnes, valued at $9.4 billion, were destined for foreign countries.

She said that in the last calendar year 11 petrochemical projects came on-stream with an investment of $3.4 billion.

Top Non-Oil Export Rank

Shahdaei said that Iran's petrochemical sector had claimed the top spot in non-oil exports, adding: "The presence of foreign companies alongside domestic companies and the memorandums signed with leading industrial companies and international financial bodies are indicative of the beginning of a new phase in development in this industry and heralds a second jump in the petrochemical industry."

She said that attraction of investment, transfer of cutting edge technologies and benefiting from domestic capabilities with a view to completing the value chain in line with the policies enshrined in resilient economy are among the future objectives of petrochemical industry.

"Thirty new projects with available feedstock are planned in the 6th Development Plan with an investment of $40 billion," Shahdaei said.

The NPC managing director said that the company was mulling over construction of new petrochemical zones in Iran.

She said that the annual IPF had always facilitated interactions between Iranian and foreign sides, adding that the 13th IPF would clear the way for a second jump in Iran's petrochemical industry.

Iran Role in World Gas

In his address to the forum, Mohammad-Hossein Adeli, secretary general of Gas Exporting Countries Forum (GECF), highlighted the inauguration of development phases 17 to 21 of South Pars.

"Iran has potential to play a major role in the world gas market through investment and international partnership," he said.

Adeli said Iran was the largest consumer of gas in the Middle East, adding: "Iran accounts for 40% of the Middle East gas consumption and its consumption reached 180 bcm in 2016."

Adeli said the 1.8% growth in gas consumption in the Middle East was high, adding: "Increased consumption in Kuwait, Saudi Arabia, United Arab Emirates and Iran constitute reasons for this growth. What makes Iran different from these countries is that it faces no shortage of gas."

Iran High Energy Consumption

Adeli said energy consumption had doubled in Iran over the 2000-2015 period. He added that energy consumption was forecast to increase again in Iran.

Adeli enumerated high energy consumption, high energy intensity and Iran's limited presence in the world gas market as the three main challenges faced by Iran in the energy sector.

"Although the inauguration of South Pars phases is an appreciable measure for the revival of Iran's gas capacity a comprehensive solution must be sought for Iran's high energy consumption. One of them could be the issue of pricing," he said.

Adeli also noted that Iran was among five countries with the highest energy intensity, saying energy efficiency was very low in Iran.

"Iran owns the largest gas reserves in the world, but its presence in the gas market is at its minimum," he said.

 

Linde, Axens and Topsoe in Iran Petchem Sector

Panel discussions were held during Iran's 13th IPF. The first panel was named "creating value in petrochemical sector by applying technology". The keynote speakers in the panel were Iran's deputy minister of petroleum for international affairs and commerce, CEO of France's Axens, deputy head of Denmark's Topsoe and a member of Executive Board members of Germany's Linde AG.

Iran's deputy minister Amir-Hossein Zamani-Nia referred to potential investors' anxiety about the reimposition of sanctions on Iran, saying: "The sanctions are irreversible and they will not apply to businesses that take shape pre-sanctions."

He said that the investors' uncertainty about oil and gas was temporary and that Iran would continue its talks with international companies. He added that the trend of talks would pick up speed in coming days.

Zamani-Nia said petrochemical plants in Iran are privately owned, adding: "The companies are in talks with foreign investors about some $10 billion projects."

He said experience had indicated that transfer of technology in downstream industries from leading countries was very difficult, as it required a win-win deal.

"Acquiring new technologies in the petrochemical industry is one of Iran's objectives that need high precision and intelligence," said Zamani-Nia.

He cited low-cost feedstock supply, necessary infrastructure, human resources as well as political and legal stability as reasons that had made Iran attractive to foreign investors.

"According to law, Iran supports foreign investors. Iran's foreign policy has always been based on constructive interaction and balance," he said.

Noting that the objective was to complete the value chain, Zamani-Nia said: "Increasing production and export of petrochemical products is half of the objective and the main objective is to complete this value chain. That is why choosing the correct technology takes up added significance."

He referred to negotiations held between the head of National Iranian Gas Company (NIGC) and Iraq's deputy minister of electricity, saying: "The banking issues between the two countries have been resolved and we will soon be able to export 14 mcm/d of gas to Baghdad."

Iran to Claim Mideast Petchem Top Rank

Jean Sentenac, CEO of France's Axens, said in the panel that Iran would become a reliable petrochemical hub in the Middle East region by 2020, thanks to its abundant gas resources.

"Gas will be the superior energy in the 21st century," he said.

Sentenac said good opportunities were awaiting the petrochemical industry in coming years, adding that Iran's petrochemical industry would grow 50% over 25 years.

"Given the production of 40 million tonnes of petrochemical products in Iran in 2014 and Iran's 4th rank in gas production in the world in 2013, Iran's petrochemical industry will continue to use more and more gas," he said.

Sentenac forecast Iran's petrochemical output to grow 10% on an annual basis. He said that Iran would be accounting for one-third of petrochemical production in the Middle East by 2020.

He said that China was consuming 60% of paraxylene produced in the world. Noting China's problems to receive enough paraxylene, he said that Iran would be able to meet China's demand.

Sentenac highlighted respect for environmental obligations in petrochemical projects, saying: "By applying new technologies energy consumption could be reduced significantly and save water consumption in a country like Iran with limited water resources."

Axens is currently providing technologies to Iran's ethylene, butane and paraxylene projects.

Petchem Industry Development with New Technologies

Christian Bruch, a member of the Executive Board of Linde AG, for his part told the panel that application of cutting edge technologies in the petrochemical industry had given rise to significant developments in the supply of diverse products.

"Under the present circumstances in the market and given numerous parameters like low crude oil prices, it would be of high significance to move towards downstream chains like plastic industry," he said.

Bruch said Iran's plastic industry was expected to see significant growth in the mid and long-term. He said Linde owned modern technologies for converting methane to chemical products.

"Currently we have developed technologies like natural gas evaporation and direct production of olefins by converting methane. That facilitates direct use of methane as feedstock," he added.

"Currently significant progress has been made in cracking. One of them is flexibility in feedstock," said Bruch.

"While there is need for new infrastructure, existing infrastructure also enjoys good conditions. Such measures as enhancing the capacity of existing plants, increasing flexibility in feedstock, energy efficiency and improving the existing units are among initiatives that could be done for increasing the output of Iran's petrochemical industry," he added.

Technology for Iran Companies

Per K. Bakkerud, Executive Vice President of Topsoe AS, said his company was willing to operate projects in Iran.

"The quality of products is the most significant factor for the superiority of petrochemical industries in international markets," he said.

Bakkerud referred to the production chain in Topsoe, saying: "We never supply a technology or product on the market without going through all its production stages. All stages must be gone through with high precision and the value chain must be gone through."

He noted that application of technology would boost the quality of products, saying: "We have tried to apply technology to methanol production plants in Iran and we have been successful in this regard."

Bakkerud said ATR technology was the most important technology developed by his company, adding that it was first developed 60 years ago.

He added that the most advanced technologies had been used to develop ATR, whose most recent version had already been used in Nigeria.

Renewed Operation in Rhum Field

BP and Iran's state-run oil company received a license from the US Treasury last year to operate their joint gas field in the North Sea following the lifting of Western sanctions on Tehran, BP announced on April 6.

Production at the Rhum field was suspended in 2010 when Europe imposed sanctions on Iran over its nuclear program and only resumed four years later after Britain agreed to set up a temporary management scheme whereby all revenue due to Tehran would be held until sanctions were lifted.

Iran regained control of its stake and on 29 September 2016 BP obtained a license from the US Treasury, through its sanctions enforcement arm - the Office of Foreign Asset Control (OFAC), to continue operations at the field, BP said in its 2016 annual report.

Iran in North Sea

Every time there is news about Iran's joint oil and gas fields the first thing striking the mind is neighboring countries. But Rhum is totally different. It is a North Sea field jointly owned by Iran and BP known as Anglo-Persian Oil Company, was founded more than a century ago.

Located 400 kilometers of Scotland, Rhum is close to Bruce gas field. Bruce was discovered in 1974 and was of high significance for Britain. Rhum, a high-pressure and high-temperature field, had technical problems like sophisticated reservoir and therefore extraction of gas from it did not start before 2006. BP had estimated to produce 6 mcm/d of gas from this field and it planned to continue recovering gas beyond 2002. Rhum supplied 5% of Britain's gas needs.

Circumventing Sanctions

But operation of this important field did not last long. In 2010, it came to a halt after the European Union adopted sanctions against Iran. But Britain was heavily dependent on the Rhum gas.

For its part, BP has warned that suspension of exploration operations in Rhum would lead to suspension of work at Bruce gas field that was using the same substructures. Bruce supplies around 3% of Britain's gas needs in the North Sea. As gas production rate fell in the North Sea and worries increased that oil prices would keep rising, Britain had to import more and more gas. Therefore, it was seeking a way to get around sanctions targeting gas extraction from Rhum.

Finally in December 2012, the European Union adopted an agreement under which operation in Rhum was granted waiver. Resumption of work at Rhum was hoped to help reduce gas price in Britain, but BP said reopening the field would last six to nine months.

After recovery started from this field, the British government placed the field under a rule which blocked Iran's revenue from Rhum as long as sanctions were in place. Of course renewed extraction from Rhum did not start soon.

Iran Gets Share Back

After holding intensive talks, Iran and six world powers struck a landmark deal in July 2015, under the Joint Comprehensive Plan of Action (JCPOA). The agreement entered into force in January 2016 and sanctions were lifted on Iran. That revived hopes for renewed oil and gas operations in Iran. Once more Iran became a country with huge reserves and attractive opportunities for investment and cooperation.

Speculation started about when Iran would be able to recover gas from Rhum. According to BP's 2016 report, Iran managed to regain its own share of the field. On September 29, 2016, the US Treasury authorized BP to continue work in the field. The relevant news was published in April.

Last year BP created an executive committee to explore business in Iran, which would exclude its American chief executive Bob Dudley in a bid to avoid potential sanctions violations.

London-based BP recorded a net profit of $31.6 million in 2016 from its 50 percent stake in the field, which supplies around 4 percent of Britain's gas demand.

"BP currently intends to continue to hold its ownership stake in the Rhum joint arrangement and act as operator," it said in the annual report.

BP did not specify for how long the Rhum field license was valid.

Previous US President Barack Obama tried to encourage non-US companies and non-US banks to increase trade with Iran, although Tehran said Washington did not do enough to ease its access to international financial markets and banks for vital capital after years of isolation.

Iran's £25.9mn Share

An important issue that had remained unresolved was Iran's share of revenue frozen during years of sanctions. Newly published accounts show that the British government has earned nearly £26 million on behalf of the Iranian Oil Company UK Ltd – after taking over management of stake in a UK gas field that had been shut down under international sanctions.

In October 2013 the Department of Energy and Climate Change (DECC) took over “temporary management” of the IOC’s stake in the gas field.

This allowed BP to restart production at the site the following October, more than a year before sanctions were lifted.

DECC collected the IOC’s share of the gas sales income in a frozen account, to be handed over after the sanctions were lifted.

The Department’s latest accounts indicate that by 31 March of this year there was £25.9 million sitting in the account.

From these funds, the Department said it would charge the IOC £1.1m for the costs government had incurred managing the gas field while sanctions were in place.

Investment Potential in Susangerd Oil Field

The West Karoun area in western Iran has potential for oil production. The existence of several huge oil fields in West Karoun has caught the attention of international oil companies for investment. Among the oil fields located in this area of Iran, Susangerd is a newly discovered one. Susangerd remains the largest oil field discovered in Iran in the past decade. According to exploration studies, this field holds 8.8 billion barrels of oil in its four reservoir layers. In a conference held in Tehran last year to introduce Iran Petroleum Contract (IPC)- the model designed to replace buyback-the field was introduced by Arvandan Oil and Gas Production Company as an investee project.

One of conditions required to be met for the development of this field is its financing. The investment needed for the development of this field stands between $400 million and $500 million. After completing the development of this field, Iran will see its oil output increase by around 30,000 b/d. A five-year plan has been defined for the development of Susangerd and negotiations have been held with several foreign companies for that purpose. However, development of such fields by foreign companies will be tied to financing.

Susangerd, for whose development IPC is to be applied, is located 45 kilometers northeast of Ahvaz, the capital of oil-rich Khuzestan Province. So far, an exploration and two appraisal wells have been drilled in Susangerd. Studies conducted on this field indicate that Susangerd will be producing 30,000 b/d of oil in its first phase of development with an API gravity varying between 16 and 20. For early production from this field, it would be possible to use installations of adjacent fields.

This field, discovered 5,026 meters underground, is estimated to contain at least 8.8 billion barrels of oil in place. The field measures 24 kilometers in length and 6 kilometers in width.

Geological and geophysical studies around the city of Susangerd were planned by the Exploration Directorate of National Iranian Oil Company (NIOC). After analyzing and interpreting the field data, it came out that Susangerd had new potential in deeper layers.

Sepehr Oil Field; High Profitability

Sepehr is another newly discovered oil field in the West Karoun area. This field has been focused upon by Iranian companies due to its high profitability and need for low investment. A contract has been signed with an Iranian company for its development. But due to international sanctions and financial restrictions, development of this field remains shrouded in mystery. Therefore, attracting foreign investment will be key to developing this field. Run by Arvandan Oil and Gas Production Company, Sepehr is located 65 kilometers from Ahvaz and 36 kilometers west of Hovayzeh.

It was discovered in 2015 and is categorized under stratigraphic traps. It is estimated to hold 2.191 billion barrels of oil in place.

The contract for conducting studies on the development of Sepehr oil field was recently awarded to an Iranian company. This agreement was signed between the Arvandan Company as the client and Kayson. The parties agreed on conducting economic feasibility studies and formulating a master development plan (MDP) in the first phase and the final development of the field. Sepehr is estimated to hold around 2.1 billion barrels of oil, 200 to 300 million barrels of which is recoverable.

The NIOC Exploration Directorate recently announced the discovery of crude oil in Sarvak and Fahlian geological formations after the drilling a well in Sepehr field. After that, a contract was signed between NIOC and an Iranian company to conduct 2D and 3D seismic tests on the field. The area envisaged for seismic testing covers the cities of Bostan, Hovayzeh and Sousangerd, the southwestern part of Ahvaz, the western part of Shadegan and the northern part of Khorramshahr. The project will last 21 months.

At stake is the connection of Sepehr to Jofair and Yadavaran fields, both located in West Karoun. Combination of new data with older one is expected to help improve the development of Yadavaran.

By conducting seismic testing, it is also hoped that new stratigraphic traps would be discovered.

The contract is worth nearly €11 million plus nearly IRR 455 billion.

Paydar Gharb Needs IOR Technology

Development of jointly owned oil and gas fields is among top priorities of Iran's Ministry of Petroleum. In the wake of the removal of international sanctions on Iran, negotiations with foreign companies for investment in development projects in Iran have gathered steam.

Iran shares numerous oil and gas fields with neighboring countries, i.e. Iraq, Kuwait, Saudi Arabia, Qatar, United Arab Emirates and Oman. Iran owns at least 15 hydrocarbon reservoirs jointly with these countries.

Iran plans to attract more investment for accelerating the development of jointly owned fields. To reach this objective, it is soliciting foreign companies under a newly developed type of oil contracts.

Iraq shares five oil reservoirs with Iran. After the US troops pulled out of Iraq, this country devised extensive plans to develop its Majnoun and Sindbad fields, which are shared with Iran, with the help of foreign companies. Iraq is currently extracting 500,000 b/d from these fields.

Paydar Gharb field, known as al-Fakkah in Iraq, is administered by the Iranian Central Oil Fields Company (ICOFC). A major problem with this field is the low rate of recovery. Enhancing recovery from this field needs state-of-the-art technology. Now that the flow of capital and technology has been activated, Iran hopes to make up for losses.

Paydar Gharb is located 150 kilometers northwest of Ahvaz. It was discovered in 1980 after one well was drilled. The oil contained in this field is heavy and the natural pressure of the reservoir is not enough for extracting oil. That makes wellhead pump inevitable.

ICOFC was recovering between 24,000 and 25,000 b/d of oil on average from this field in 2009.

Oil is extracted by multi-phase pumps and carried through two pipelines to Cheshmeh-Khosh production unit. Development of this field is estimated to need at least $400 million in investment.

ICOFC recently updated information about Paydar Gharb field. The necessity of enriching reservoir data through new coring, logging and conducting pressure tests all across the field, necessity of setting a timeframe for drilling new wells and completing wells at different layers and the necessity of reviewing recovery rates in a more realistic way have been among the most important points highlighted by this company.

Paydar Gharb's average oil production surpassed 30,000 b/d in 2016, up from 25,000 b/d a year before. Plans are under way to raise the current output to 32,000 b/d.

Iraq plans to increase crude oil production from its al-Fakkah field in cooperation with China's CNOOC and Turkey's TPAO.

South Pars, Wushu Champion

Extensive activities of Iran’s petroleum industry in sports apply to wushu, too. In a bid to serve Iran’s sport, the ministry has trained a team and won titles both nationally and internationally.

South Pars Wushu team has been the undisputed wushu champion over the past three years. It won titles in foreign games. The team currently has a squad comprised of local and national wushuists. The following is a brief review the activities of the South Pars wushu team.

In 2012, the Iranian Ministry of Petroleum decided to delegate authority over non-football teams operating in Tehran to oil-rich cities. Wushu was one of them and the continuation of its activity was assigned to the Pars Special Economic Energy Zone (PSEEZ) in Assaluyeh because of its good record of wushu-related activities. The South Pars wushu team was given the go-ahead to contest the pro league 2013 season and acquired championship with the same people and technical staff. The title acquisition was repeated two years later to give the South Pars wushu team an extraordinary result. Championship for three years in a row was not seen before, but the South Pars team set a precedent.

Hiring National Wushuists

The South Pars wushu team is composed of national wushuists and locals from Bushehr Province. Authorities at South Pars Wushu Club have hired some national stars like Mohsen Mohammad-Seifi, Ali Qolizadeh and Amir Fazli in a bid to support national wushuists. In the meantime, some talented wushuists in Bushehr Province and those who need training join this composition every year and win titles. The idea behind hiring these wushuists is to provide financial and spiritual support for national wushuists. That could significantly help them make progress and also contribute to wushu development at national level.

National Head Coach at South Pars

Hossein Ojaqi coaches both national wushu team and South Pars wushu team. He is an employee of the Iranian Ministry of Petroleum and has taken special measures in South Pars. For its part, the Pars Special Economic Energy Zone (PSEEZ) has supported Ojaqi so that he could carry out his jobs in the best possible way.

Growing Wushuists for National Team

One of the important issues that have been on the agenda of the South Pars wushu team has been to find people to be trained for this purpose. Over the past couple of years, wushuists like Omid Shahryari, Yousef Kheyri and Yazdan Karaminejad, all from Bushehr Province, have been identified by the technical staff of the South Pars wushu team and have joined training sessions for adults. These people were quick to prove their talents and find their way into the national squad.

Another positive point with the South Pars team has been to attract wushu champions among youths and young adults. These young wushuists are helped by the South Pars team managers to join the team and they are put on the progress track.

Two Global Titles

A special record marked by the South Pars wushu team was double championship titles in Pars Cup. This cup is registered by the World Wushu Federation and is held every year with the participation of a variety of teams from across the world. Over the past two years, the South Pars team has represented Iran in the wushu championship matches. Last year, twenty teams participated in the matches while this year, 14 teams from 13 countries took part.

Shahrdari Damaghan was another representative of Iran in the matches. In both years, the South Pars wushu team won the championship title. The interesting point is that Indonesia came distant in second position after South Pars. That was a great source of honor for Iran’s wushu.

Aiding National Sport

Based on what was said above, the South Pars wushu team has had a significant role at national level. Supporting national champions under the present undesirable economic conditions has been the most important parameter for the South Pars team.

Wushuists have seen their financial needs met to a great extent and they are now taking steps towards success. These national wushuists are participating in global and Asian matches with more peace of mind and they can create honor for the national wushu team.

Interview with Ayoub Cheraghi, head of South Pars Wushu Team

Unity, Key to Our Success

Ayoub Cheraghi has been instrumental in the success of the South Pars wushu team. He has been leading the team over the past two to three years and has been a key element in success achieved by the team. Cheraghi praises support by senior managers for his success. Here is an interview with Mr Cheraghi.

Q: This year you have won both the wushu league championship and the golden cup. Would you please tell us about it?

A: I think South Pars has provided good support for this team and a connected link has given rise to these good results. In our team, everyone - senior managers, wushuists and technical staff- have been making significant efforts and the result of these efforts has been our good achievements and results in the pro league and Pars International Cup.

Q: Rarely does your team complain about financial issues, while most sports teams are unhappy with their economic situation. How is that possible?

A: We have been lucky because the CEO of Pars Special Economic Energy Zone is cooperative and favors sports. He has a good view of this sector. He has withheld nothing from us. In the meantime, Mr Rezaei, manager of South Pars club, has always taken positive steps in favor of sports. Thanks to this support, we have managed to meet the financial needs of our national athletes. Of course, it must be noted that wushu costs are much lower than other sports. But we have to meet their needs. It would be enough for us to have wushuists who do not complain about their conditions.

Q: Isn’t Hossein Ojaqi’s presence as the head coach in South Pars and national team problematic?

A: No, Mr. Ojaqi is our colleague. He can handle both jobs satisfactorily and it is a great source of honor for us to be able to benefit from his advices and services.

Q: Any closing statement?

A: Here I would like to offer my gratitude to Messer Shah Karami, director-general of sports at the Ministry of Petroleum, Yousefi, CEO of PSEEZ, Qourchian, head of sport affairs at National Iranian Oil Company (NIOC), Rezaeian, CEO of South Pars Cultural and Sport Club and members of the Board of Directors of South Pars Club who have assisted us over these years. I hope that we would be able to achieve success in coming years.

Golestan and Panoramic Waterfalls

Golestan Province which neighbors the Republic of Turkmenistan to the north, Mazandaran Province and Caspian Sea to the west and Semnan Province to the south expands on 22,000 square kilometers. Gorgan, Bandar Turkmen, Bandar Gaz, Ali Abad, Kordkouy, Gonbad Kavous and Minoudasht are the seven important cities of this province.

According to historcal documents, Gorgan is several millennia old. Its old architecture dates from the Safavid, Zand and Qajar dynasties.

Among tourist attractions in Golestan Province are beautiful landscape and natural waterfalls.

Golestan National Park

Golestan National Park is one of Iran’s largest, oldest and finest national parks. Located in the north-east of Iran, inland from the south-east corner of the Caspian Sea, its 92,000 hectares account for the most part of a weathered limestone plateau. It is remarkable for the diversity of climatic zones and ecosystems encompassed within a single national park.

Many species of animals have been identified within the Park: 69 species of mammals; 150 species of birds; 24 species of reptiles; and 2 species of amphibians. Prominent among the mammals are Persian leopard, brown bear, wolf, jackal, red fox, wild cat, wild boar, Caspian red deer, gazelle, Ural sheep and Persian ibex. Readily observed birds include large raptors such as golden and steppe eagles and lammergeyers, as well as medium-sized ground lovers such as partridges and pheasants. The Park’s 1,365 plant species include junipers thousands of years old as well as several species endemic to the region such as Alma saffron and Persian ironwood.

 

Shirabad Waterfall

The Shirabad Waterfall is a waterfall in the Alborz mountain range, at the village of Shirabad in the Fenderesk District of Golestan Province. It is in a forested area, 7 kilometers south of Khanbebin.

Shirabad Waterfall is in the form of a stairway cascade and includes 12 large and small waterfalls. Its largest waterfall is 30 meters (98 ft) high and its plunge pool is 40 to 80 meters (130 to 260 ft) deep.

There are several caves nearby, which are home to the critically endangered Gorgan salamander.

Lowe Waterfall

Lowe Waterfall is located 20 kilometers from Galikash. It derives its name from a village of the same name. The waterfall is situated in a thick forest.

The proximity of the waterfall to Golestan forest park has made it attractive. Galikash is home to numerous waterfalls, among them 75-meter Lowe is unique.

Baran Kuh Waterfall

Baran Kuh is among beautiful tourist attractions in Golestan Province and particularly Gorgan County. It has remained intact due to difficult accessibility. This waterfall is located 18 kilometers southwest of Gorgan near Shast Kala River near a forest of the same name.

The waterfall's name is Baran Kouh (literally meaning Rain Mountain). It is because of its form which is like rainfall.

 

Taqavi School Edifice

Taqavi School Edifice dates from the final years of Qajar rule. It was registered as national heritage in 2001. The school expands on more than 2,000 square meters and is attributed to Mirza Mohammad Taqi Taqavi.

There are ten yards, five of which have so far been restored by Iran's cultural heritage organization. The edifice is currently being used as the administrative site of Golestan Province Cultural Heritage, Handicraft and Tourism Organization.

 

 

Golestan Province Ready to Swap Oil Products with Central Asia

There is currently proper infrastructure for boosting the transit and swap of oil products and fuel oil via Golestan Province with Turkmenistan and Kazakhstan. This infrastructure has been reinforced after Gorgan was connected to the two Central Asian states via railway.

Amir Bani-Karimi, manager of the Golestan Zone of National Iranian Oil Products Distribution Company, made the aforesaid remarks in an interview with Iran Petroleum.

"After increasing the oil storage capacity in Gorgan and Gonbad in Golestan province to 210 million liters, good potential has been crated for swapping crude oil and petroleum products. This province enjoys good land and sea infrastructure for this purpose," he said.

Bani-Karimi said a center has been established to monitor the oil products flow in Incheh Boroun in the province. "We are in talks with neighboring countries to establish border gas stations in this district. Every day, 130 fuel trucks cross Iran's border for Turkmenistan. We have the potential to bring the number of trucks to 200," he said.

He said that 2.8 million liters were being distributed on a daily basis in this province.

"This province accounts for 1.6% of gasoline, liquefied petroleum gas, kerosene, gasoil and fuel oil consumption in Iran," he said. "In Golestan Province, 1.1 ml/d of gasoline, 570,000 cubic meters a day of CNG, 334,000 l/d of LPG, 185,000 l/d of kerosene, 1.5 ml/d of gasoil and 8,000 l/d of fuel oil is distributed."

Bani-Karimi said that 130 gas stations and 200 fuel selling posts were active in Golestan Province. He added that Golestan's central fuel supply station is set to raise its capacity from 360,000 liters to 1 million liters.

Bani-Karimi said that six gas and LPG stations became operational in the last calendar year, adding that more fuel stations were planned to be built in the province.

He said that Incheh Boroun was set to become a free trade zone in the province and would then attract domestic and foreign visitors.

"We have envisaged comprehensive plans in order to set up fuel distribution stations in this zone in cooperation with private investors," said Bani-Karimi.

He said that agriculture was the economic symbol of Golestan Province, adding that fuel supply was an important issue for the economic sector.

Bani-Karimi touched on enhanced gas production in the upstream oil industry and the ensuing boost in gas supply to power plants in the country, saying: "Last year, Golestan Province saw a 144% growth in gas supply to its power plants. The upward trend will continue this year with good planning."

"It is to be noted that last year after Turkmenistan halted its gas supply we had no problem with fuel supply thanks to public cooperation and efforts by Iranian oil industry officials," he said.

Bani-Karimi said development of Gorgan oil depot was a strategic project in the province. He added that the depot would soon see its capacity increase by 20%.

Bani-Karimi said by next March the depot would be also equipped with state-of-the-art technologies and electronic protection systems.